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NO. 8781 /

United States Circuit Court of Appeals

For the Ninth Circuit . / /

i? "^"^

V

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United States of America,

Plaintiff and Appellee, I [//(^

vs.

Jesse H. Shreve, Archie C. Shreve,/
Daniel H. Shreve, Glen O.Per-|
KINS and W. C. Evans,

Defenda7its and Appellants.

^0^7

BRIEF OF APPELLANTS

Jesse H. Shreve and Archie C. Shreve

Leslie C. Hardy,
Attorney for Appellants, Jesse H. Shreve

and Archie C. Shreve

906 Luhrs Tower, Phoenix, Arizona

George H. Shreve,

Washington Building,

Los Angeles, California W

Elliott, Hardy & Glenn,

906 Luhrs Tower,
Phoenix, Arizona

On the Brief, p^.

18

TOPICAL INDEX

Page

SUMMARY STATEMENT OF THE CASE 1

STATEMENT AS TO JURISDICTION 3

STATEMENT OF THE CASE:

The Indictment 3

The Facts 5

QUESTIONS INVOLVED 9

SPECIFICATION OF ASSIGNED ERRORS 11

ARGUMENT OF THE CASE 11

FIRST: The trial court erred in overruling defend-
ants' special demurrer which attack the indictment
for duplicity. The alleged fraudulent schemes
are pleaded in counts one and four of the indict-
ment. By the language employed in count one of
the indictment, the schemes there pleaded are
interwoven with the schemes pleaded in count
four. In this wise the several counts of the in-
dictment are joined 11

SECOND: The bill of particulars ordered by this
Court in its opinion reversing the judgment on
the former appeal, does not comply with the opin-
ion, nor with defendants' demand for a bill of par-
ticulars as allowed by the trial court. The bill is
evasive, indefinite, and incomplete, and it does not
fairly advise defendants of the evidence they were
required to meet. The trial court therefore erred
in overruling defendants' objection to the bill, and
in denying defendants' motion to supplement it 14

THIRD : The trial court erred in permitting Govern-
ment's witness Fierstone to testify that stock of
Security Building and Loan Association held by

II. TOPICAL INDEX

Page
Century Investment Trust valued at $99,457.50
was charged off as a loss on December 16, 1931.
because that is a transaction which occurred af-
ter the last date of any indictment letter or print-
ed matter, and because it occurred subsequent to
the date any scheme was executed as fixed by the
bill of particulars 16

FOURTH: The witnesses Hobbs and Perkins testi-
fied on behalf of the Government concerning con-
versations with defendants Jesse H, Shreve and
Archie C. Shreve. The trial court erroneously
refused to permit defendant Archie C. Shreve to
give his version of these conversations, or to per-
mit defendants to make offer of proof in respect
thereto 20

1. Defendants' version of these conversations was
not immaterial, self-serving, or impeaching,
which were the only grounds of objection in-
terposed by Government counsel. The conver-
sations were opened by the Government and
defendants were then entitled to give the
whole of their version of it 32

2. The trial court erred in refusing defendants
to make an offer of proof of this rejected
testimony 3G

3. Refusal to permit defendant Archie C. Shreve
to testify with regard to Government's Exhibit
207 concerning a conversation with Govern-
ment's witness Perkins, was error 37

FIFTH: The indictment alleges that the defendants
falsely pretended and represented that all money
deposited with the Security Building and Loan
Association would be invested in sound first mort-
gages on improved real estate carefully selected,
whereas such mortgages were at all times uncol-
lectable and practically worthless. The trial court
erred in admitting in evidence exemplified copies

TOPICAL INDEX HI.

Page

of such mortgages, and also exemplified copies of
deeds and assignments related thereto, without
first requiring the Government to account for the
failure to produce the originals, or in anywise lay
the foundation for admission of secondary evi-
dence thereof 40

SIXTH: The Government's witness Watt testified
he rewrote the books of Century Investment Trust
and Arizona Holding Corporation at the direction
of the deceased defendant, Daniel H. Shreve, from
records not made by him, and from information
obtained by him from whatever sources available.
He also testified many entries in these books are
reflected into the books of Security Building and
LfOan Association. The trial court erred in ad-
mitting these books in evidence, since they were
not original entries of the transactions there re-
corded, are not the best evidence, and are hearsay.. 59

SEVENTH: The trial court erred in permitting Gov-
ernment's witness Fierstone to testify with re-
spect to an audit made by him of books of Cen-
tury Investment Trust, for the reason said books
were not admissible in evidence, as shown by the
testimony of Government's witness Watt relating
to these books. The testimony of the witness
Fierstone concerning this audit was therefore bas-
ed upon books which did not contain the original
entries of the transactions there recorded ; it was
not the best evidence, and was hearsay 66

EIGHTH: The Court erred in admitting in evidence
records of the First National Bank of Prescott,
Arizona. The First National Bank of Prescott is
not mentioned in the indictment, nor in the bill
of particulars. Evidence on behalf of the Govern-
ment disclosed that these records were not iden-
tified by the persons who made them. According-
ly no proper foundation was laid for the admis-
sion of these records in evidence; they are not

IV. TOPICAL INDEX

Page

the best evidence; and are hearsay. They were
not admissible under the Act of Congress of June
20, 1936 (Sec. 695, Title 28, USCA) because that
Act, if applied to this case, is void in that it
offends the Federal Constitution by not requiring
that defendants be confronted with the witnesses
against them; it is ex post facto, because the in-
dictment was returned before the Act became
effective; and it deprives defendants of due pro-
cess of law "°

1. Records of First National Bank of Prescott
were admitted in evidence as a part of the
case of the Government. Admission of these
records in evidence was error, because no foun-
dation was laid for their admissoin ; they were
not original entries; and were hearsay 73

2. The foregoing records were not admissible un-
der the Act of June 20, 1936 (Sec. 695, 695h,
Title 28, USCA) because that Act does not
apply to this case, but, if it does, then it is
unconstitutional and void 79

NINTH: The trial court erred in admitting testi-
mony of Government's witness Schroeder based
upon his audit of books and records of Century
Investment Trust, Arizona Holding Corporation
and Security Building and Loan Association. The
witness Schroeder testified said audit was made
in part from books and records of corporations
not named in the indictment, and the books and
records of said corporation were not in evidence
or before the court. For these reasons the trial
court also erred in refusing defendants' motion to
strike the testimony of the witness Schroeder 81

TENTH: The trial court erred in admitting in evi-
dence a mortgage executed by Wm. H. Perry to
Yavapai County Savings Bank because it is a
transaction between parties not named in the in-
dictment; no foundation was laid for its admis-

TOPICAL INDEX V.

Page
sion; and it is hearsay. The trial court also erred
in admitting in evidence a sheriff's deed executed
to said bank following the foreclosure of said
mortgage, because no foundation was laid for its
admission, and, further because the preliminary
proceedings leading up to the execution of said
sheriff's deed were not in evidence, and such
proceedings were the best evidence to support the
admission of said sheriff's deed in evidence 87

ELEVENTH: The trial court erred in admitting
testimony of Government's witness York concern-
ing communications between the witness and his
daughter relating to transactions on behalf of one
of the corporations named in the indictment, be-
cause the testimony was hearsay. For this reason
the trial court also erred in refusing defendants'
motion to strike the testimony 93

TWELFTH: The trial court erred in refusing to
permit defendants' witness Crane, a certified pub-
lic accountant, to testify that practices of ac-
counting indulged in between Century Investment
Trust and Security Building and Loan Associa-
tion, as related by Government's witness Fier-
stone, were in accord with accepted accounting
principles 97-

THIRTEENTH: The trial court erred in charging
the jury with respect to defendants' connection
with the schemes alleged in the indictment; and
the trial court also erred in refusing to instruct
the jury with respect to the failure of proof con-
cerning the allegation in the indictment that de-
fendants falsely represented that Security Build-
ing and Loan Association had a paid-in capital
stock of 1300,000.00 103

VI. TOPICAL INDEX

Page

FOURTEENTH : The court erred in denying defend-
ants' motion for an instructed verdict because the
evidence was insufficient to prove that these de-
fendants used the mails to execute the schemes,
or any of them, alleged in the indictment 107

CONCLUSION 114

TABLE OF AUTHORITIES CITED
Cases and Texts

Page
Beck V. United States, (CCA8) 33 Fed. (2d) 107 79, 109

Bogk V. Gassert, 149 U. S. 17, 13 Sup. Ct. 738, 37

L. Ed. 631 35

Buckeye Cotton Oil Co. v. Sloan, (CCA6) 250 Fed. 712.... 106

Carstensen v. Ballantyne, 40 Utah 407, 122 Pac. 82 36

Kassin v. United States, (CCA5) 87 Fed. (2d) 183 113

Carver v. United States, 164 U. S. 694, 17 Sup. Ct.

228, 41 L. Ed. 602 34, 36

Chaffee v. United States, 18 Wall. 516, 21 L. Ed 908 79

Corpus Juris:

Vol. 15, p. 1056 , 54

Vol. 16, pp. 571, 634, 636, 766 33, 36, 112

Vol. 22, pp. 737, 974, 1045 103, 58, 91

Vol. 23, p. 101 52

Vol. 31, pp. 742, 744, 659, 660 13, 14

Vol. 34, pp. 1043, 1050, 1067 93, 93, 92

Vol. 59, p. 1056 54

Vol. 64, p. 617 106

Creel v. United States, (CCA8) 21 Fed. (2d) 690 14

Cullen V. United States, (CCA9) 2 Fed. (2d) 524 64

DeJianne v. United States, (CCA3) 282 Fed. 737 13

VIII. TABLES OF AUTHORITIES CITED'

Page
Ding V. United States, (CCA9) 247 Fed. 12 50, 51, 5&

Drexel v. True, (CCA8) 74 Fed. 12 40

Erie Railroad Co. v. Harry J. Tompkins, 82 L. Ed. (Ad-
vance Opinions) 787; 58 Sup. Ct. Rep. &17...- 58

Ford V. United States, (CCA9) 10 Fed. (2d) 339 40

Freeman v. United States, (CCA3) 20 Fed. (2d)

748 108, 111, 112

Greenbaum v. United States, 80 Fed.

(2d) 113 56, 57, 79, 81, 84, 112

Hass V. United States, (CCA8) 93 Fed. (2d) 427 19

Hartzell v. United States, (CCA8) 72 Fed. (2d) 569 40

Hinton v. Welch, 179 Cal. 463, 117 Pac. 282 36

Indian Fred v. State, 36 Ariz. 48, 282 Pac. 930 54

Kettenbach v. United States, (CCA9) 202 Fed. 377. 16, 19, 20

Malloy V. South Carolina, 237 U. S. 180, &9 L. Ed. 905,

35 Sup. Ct. Rep. 507 80

McGowan v. Armour, (CCA8) 248 Fed. 676 40

Mutual Benefit & Accident Ass'n v. Neale, 43 Ariz. 532,

33 Pac. (2d) 604 54, 57, 92

Neal V. United States, (CCA8) 1 Fed. (2d) 637 50, 52

Nichols Applied Evidence, Vol. 5, pp. 4762 to 4767 35, 36

O'Brien, Manual of Federal Appellate Procedure,

pp. 20, 21 107

Osborne v. United States, (CCA9) 17 Fed. (2d) 246 78, 84

Pabst Brewing Co. v. E. Clemens Horst Co., (CCA9)

229 Fed. 913 79, 84

TABLES OF AUTHORITIES CITED IX.

Page

Paddock v. United States, (CCA9) 79 Fed. (2d) 872 113

People V. Vamar, 320 111. 287, 150 N. E. 628 80

Perrin v. United States, (CCA9) 169 Fed. 17 36

Phillips V. United States, (CCA8) 201 Fed. 259 79

Roukous V. United States, 195 Fed. 353 112

Rowe V. Whatcom County Ry & Light Co., 44 Wash. 658,

87 Pac. 921 102, 103

Ruling Case Law (Cited R. C. L.) 115

Shreve v. United States, 77 Fed. (2d) 2....1, 15, 64, 75, 78, 96

Sprinkle v. United States, (CCA4) 150 Fed. 56 40

State V. Shaw, 75 Wash. 326, 135 Pac. 20 80

Stevenson v. United States, (CCA5) 86 Fed. 106 36

Swift V. Tyson, 16 Peters 1, L. Ed. 865 58

United States v. Adams Express Company, 119 Fed. 240... 16

United States v. Elder, 232 Fed. 267 80

United States v. Fay, (D. C. Idaho) 19 Fed. (2d) 620 50

Valli V. United States, (CCAl) 84 Fed. (2d) 687 80

Wilkes V. United States, (CCA9) 80 Fed. (2d) 285 79, 84

Withaup V. United States, (CCA8) 127 Fed. 530....50, 51, 58

Young V. Southern Pacific Co., 182 Cal. 369, 190 Pac. 36....105

STATUTES, CODES AND RULES

Page

Act of Confess of June 20, 1936 79

Constitution of the United States:

Sec. 9, Article 1 80

Sixth Amendment 80

Revised Code of Arizona, 1928:

Sec. 4454 54, 55

Sec. 4456 53

Preface Lv

Revised Statutes of Arizona, 1901:

Sec. 2541 55

Sec. 2543 55

Sec. 2546 52, 53

Sec. 2548 52

Revised Statutes of Arizona, 1913:

Sec. 1738 55

Sec. 1740 55

Sec. 1743 53

Sec. 1745 53

Rule 43 (c) Civil Procedure for United States

District Courts 37

United States Code Annotated (USCA) :

Sec. 41. Title 28, USCA 3

Sec. 88, Title 18, USCA 1, 3

Sec. 225, Title 28, USCA 3

Sec. 338, Title 18, USCA 1, 3, 108

Sec. 371, Title 28, USCA 3

Sec. 661, Title 28, USCA 50, 56

Sec. 688. Title 28, USCA 50

Sec. 695, Title 28, USCA 9, 79

Sec. 695h, Title 28, USCA 79

United States Criminal Code:

Sec. 37 1, 3

Sec. 215 1, 3

APPENDIX

Page

Proclamation Declaring Arizona Admitted as a State 10

Subd. (c) Rule 43, Rules of Civil Procedure for the Dis-
trict Courts of the United States, adopted by the
Supreme Court of the United States 5

United States Code Annotated (USCA)

Sec. 661, Title 28, USCA 8

Sec. 688, Title 28, USCA 8

Sec. 695, Title 28, USCA , 18

Sec. 695h, Title 28, USCA 19

Revised Statutes of Arizona, 1928:

Sec. 4458 9

NO. 8781

United States Circuit Court of Appeals

For the Ninth Circuit

United States of America,

Plaintiff and Appellee, ^

vs.

Jesse H. Shreve, Archie C. Shreve,/
Daniel H. Shreve, Glen O.Per-|
KINS and W. C. Evans,

Defendants and Appellants.

BRIEF OF APPELLANTS

Jesse H. Shreve and Archie C. Shreve

SUMMARY STATEMENT OF CASE
This cause is now on appeal for the second time.
On the former trial the judgments were reversed and
a new trial ordered. Shreve vs. U. S., 77 Fed. (2nd)
2, decided April 29, 1935.

The defendants' were indicted by a grand jury
of the United States for the District of Arizona on
December 23, 1933,^ (R. 1 to 38) for a violation of
Sec. 215 of the Criminal Code (Sec. 338, Title 18,
USCA) and Sec. 37 of the Criminal Code (Sec. 88,
Title 18, USCA), commonly referred to in order nam-
ed as the ''mail fraud" and ''conspiracy" statutes.
The indictment is in twelve counts, the first eleven
charging use of the mails in furtherance of schemes

1. Appellants will be referred to as "defendants" and appel-
lee as "Government".

2. Defendants were previously indicted (Feb. 22, 1933) for
violation of the same statutes, but a demurrer was sustained to
that indictment during the taking of testimony on the trial.

(2)

to defraud, and the twelfth, a conspiracy to violate
the remaining eleven counts of the indictment (R.

1).

On February 13, 1934, the cause first came on
for trial before Honorable Albert M. Sames, and a
jury, in the United States District Court at Tucson,
and the defendants Jesse H. Shreve, Archie C. Shreve
and Daniel H. Shreve were convicted upon the first
eleven counts of the indictment and the jury dis-
agreed upon the twelfth count; the defendant Glen
0. Perkins was convicted upon the first four counts
of the indictment; and the defendant W. C. Evans
was convicted upon counts one and four of the in-
dictment (R. 180). As stated above, upon appeal
these judgments of conviction were reversed.

The cause came on for retrial on January 11,
1938, as to the defendants Jesse H. Shreve and Archie
C. Shreve only, before Honorable Dave W. Ling and
a jury, at Phoenix, Honorable Albert M. Sames hav-
ing accepted a disqualification to retry the cause
(R. 180).

Previous to the retrial of the cause, the defend-
ant Daniel H. Shreve died, and the action was abat-
ed as to him (R. 181). The defendant Perkins was
granted a severance after the former judgment of
conviction was reversed and before the retrial of the
cause (R. 181). He testified as a witness for the
Government (R. 557). During this interim the in-
dictment was dismissed as to the defendant Evans
(R. 181). He also testified as a witness for the
Government (R. 303).

At the time the cause was called for retrial, the
twelfth count of the indictment (conspiracy count)
was dismissed upon motion of the United States At-
torney (R. 182). The defendants Jesse H. Shreve
and Archie C. Shreve were again convicted upon the

(3)

eleven remaining counts of the indictment (R. 135,
136) and sentenced to four years imprisonment upon
each count, sentence upon each count to run con-
currently (R. 180).

The sufficiency of the evidence to sustain the
verdicts is questioned in the particular that the evi-
dence is insufficient to prove that these defendants
mailed the indictment letters. All the evidence is
therefore included in the bill of exceptions (R. 902).
The entire charge of the Court is also included, be-
cause objection is made to some of the Court's in-
structions (R. 849).

STATEMENT AS TO JURISDICTION

This is a criminal case instituted in the United
States District Court for the District of Arizona by
a grand jury indictment charging defendants with
a violation of Sec. 215 of the Criminal Code (Sec.
338, Title 18, USCA) and Sec. 37 of the Criminal
Code (Sec. 88, Title 18, USCA). The jurisdiction
of the Court below was invoked under Sees. 41 and
371, Title 28, USCA. The jurisdiction of this Court
is invoked under Sec. 225, Title 28, USCA, as amend-
ed by the Act of February 13, 1925.

STATEMENT OF THE CASE
The Indictment

The first count (R. 1) of the indictment sets
forth schemes to defraud by false pretenses and
representations alleged to have been made by de-
fendants in connection with a corporation organized
under the laws of Arizona known as Security Build-
ing and Loan Association. The indictment alleges
that, in carrying out the schemes set forth in this
count, defendants would cause this corporation to be

(4)

organized and would maintain complete control of it,
causing it to engage in the business of receiving de-
posits, issuing so-called pass books and investment
certificates to depositors by solicitation and invita-
tion, and that for the purpose of inducing such de-
posits, defendants would falsely pretend that the de-
positors' money could be safely and profitably in-
vested; that such deposits would be secured by guar-
anteed capital and by first mortgages on Arizona
real estate; that the association would pay six per
cent interest on such deposits; that such deposits
could be withdrawn, in whole or in part, at any time :
that such deposits would be safely invested; that
such deposits would be invested in sound mortgapres
on improved real estate carefully selected; that $300.-
000.00 of the capital stock of the association had been
paid in, whereas the paid-in capital stock never ex-
ceeded $45,000.00; and that by means of such fals^
pretenses large sums of money were obtained and
deposited with the association. The indictment then
alleges that defendants, for the purpose of executing
such schemes, mailed the letters set forth in the first
three counts of the indictment to the persons named
therein (R. 6, 10, 12).

The fourth count (R. 14) of the indictment sets
forth schemes to defraud, by pretenses and repre-
sentations alleged to have been made by defendants,
in connection with two corporations also organized
under the laws of Arizona, known as Century In-
vestment Trust and Arizona Holding Corporation.
The indictment alleges that, in carrying out the
schemes set forth in this count, defendants would
cause Century Investment Trust to be organized and
would maintain complete control of it and also Ari-
zona Holding Corporation, theretofore organized un-
der the laws of Arizona; that defendants would cause

(5)

Century Investment Trust to issue large amounts of
its stock to defendants and to Arizona Holding Cor-
poration; that defendants would cause these corpora-
tions to sell large amounts of stock to any and all
persons who might be induced to purchase, and that
for the purpose of obtaining money or property in
exchange for such stock, defendants would falsely
pretend that Century Investment Trust was in a
solvent condition; that it was doing a large and
profitable business; that it would have net earnings
and income out of which dividends would be paid to
stockholders; that dividends were paid out of net
earnings and income when in fact they were paid
out of capital supplied by defendants; and that by
means of such false pretenses and representations
large sums of money were obtained from the pur-
chasers of such stock. The indictment then alleges
that defendants, for the purpose of executing such
schemes, mailed the letters set forth in the fourth
and remaining counts of the indictment (R. 18 to 38).

The Facts

The Arizona Holding Corporation was organized
in 1928 by defendant Glen 0. Perkins for the pur-
pose of raising funds to secure the capital required
by the laws of Arizona to organize a building and
loan association. The plan was conceived solely by
Perkins (R. 630, 631). Difficulty was encountered
in raising this capital and Perkins and one John C.
Hobbs (who then had come into the venture) induced
the defendants Jesse H. Shreve and Archie C. Shreve
to associate themselves with it. L. C. James, Dr. C. A.
Thomas and Dr. Bascom Morris originally interest-
ed themselves in Arizona Holding Corporation with
Perkins and Hobbs, but they disposed of their in-
terest to defendant Jesse H. Shreve, and his asso-

(6)

dates, and withdrew from further participation in
the company (R. 634). In March 1929, Security
Building and Loan Association was organized for the
purpose of carrying out the plan as conceived by Per-
kins (R. 212, 746). Difficulties were encountered in
the operation of Arizona Holding Corporation. This
prompted the organization of Century Investment
Trust which was to own and control the stock of
Security Building and Loan Association (R. 750).
Approximately two years after its organization. Se-
curity Building and Loan Association became insol-
vent and ended in receivership. A like fate befell
Arizona Holding Corporation and Century Invest-
ment Trust.

Evidence was introduced attempting to show that
Arizona Holding Company, Century Investment Trust
and Security Building and Loan Association were
managed or controlled by defendants Jesse H. Shreve,
Archie C. Shreve, Daniel H. Shreve (now deceased),
Glen 0. Perkins, and also John C. Hobbs who was
not indicted. The indictment letters are signed by
either Daniel H. Shreve, Glen 0. Perkins, John C.
Hobbs or R. F. Watt (R. 1 to 38). None is signed
by defendants Jesse H. Shreve or Archie C. Shreve.
The letter set forth in count one (R. 1), addressed
to Fred Sweetland, enclosed a statement of the con-
dition of Security Building and Loan Association as
of December 31, 1930. The Government sought to
show by Government witness-auditor Fierstone, that
this statement was false, particularly as to the item
of surplus and undivided profits (R. 692, 694). With
one exception the indictment letters were mailed af-
ter the addressee named therein became investors
with the companies to which the letter referred.
That exception is the letter addressed to Mrs. Alice
H. Davis (R. 29).

(7)

In a large part the evidence of the Government
pertained to books of Arizona Holding Corporation,
Century Investment Trust and Security Building and
Loan Association, corporations named in the indict-
ment. These books and records were audited by Gov-
ernment's witnesses Shroeder and Fierstone, both of
whom were Federal agents doing accounting work
(R. 654, 688). By summaries of these books, they
sought to show that the indictment corporations were
insolvent, and hence the pretenses and representations
made by defendants with respect to the financial con-
dition of these corporations were false.

The contentions of the Government, as we inter-
pret the record, are:

First : The defendants Jesse H. Shreve and Archie
C. Shreve, perceiving that Perkins and Hobbs had
raised approximately $35,000 through sale of stock
of Arizona Holding Corporation for the purpose of
organizing a building and loan association, sought
to divert that fund from the intended purpose of
Perkins and Hobbs, and to this end secured $30,000
from the First National Bank of Prescott upon loans
made by persons other than themselves, or the cor-
porations involved^. The Government then sought to
show that these individual loans were paid, not by
the makers of the notes evidencing the loans, but by
Security Building and Loan Association from funds
deposited with it by Arizona Holding Corporation,
these funds having been received by Arizona Holding
Corporation as the result of a loan made by it to
Overland Hotel and Investment Company, a corpora-
tion controlled by defendants Jesse H. Shreve and
Archie C. Shreve'*. Certificates of deposit totaling

3. These notes were made by Joseph H. Shreve (a brother
of defendants) Glen O. Perkins and J. G. Cash (R, 313, 314).

4. Testimony of Government's witness Schoeder (R. 687).

(8)

$50,000 were issued by the First National Bank of
Prescott (R. 305, 306, 307).^ They were made payable
to the State Treasurer and were deposited with him
for the purpose of securing the permit for Security
Building and Loan Association to do business (R.
304). Subsequently these certificates of deposit were
withdrawn and real estate mortgages and a surety
bond substituted (R. 827). The certificates were then
endorsed to Security Building and Loan Association
(R. 306, 308). Thus, taking the Government's ver-
sion of the case, Security Building and Loan Asso-
ciation repossessed this deposit, and Overland Hotel
and Investment Company had secured a $30,000 loan
from proceeds raised by the sale of stock of Arizona
Holding Corporation.

Second: The Government relied greatly upon
transactions reflected by deeds, mortgages, and as-
signments of mortgages, which were carried as assets
upon the books of either Arizona Holding Corpora-
tion or Security Building and Loan Association. It
was contended that no consideration passed between
the parties thereto (R. 657 to 671).

Third: The ventures had their beginning in 1928.
The principal operations were in the direful years
1930 and 1931. Arizona Holding Corporation, and
its successor in purpose. Century Investment Trust,
and Security Building and Loan Association failed
in 1931 (R. 268, 272). The indictment alleges, and
the Government sought to prove by the witness-audi-
tors Schroeder and Fierstone that these companies
were never solvent, and consequently the pretenses
made by defendants, as set forth in the indictment,
were false, and knowing they were false, defendants

5. Of this amount $20,000 was deposited with First National
Bank of Prescott by Arizona Holding Corporation (R. 309).

(9)

devised the schemes as alleged, and in furtherance
of the schemes mailed the indictment letters.

QUESTIONS INVOLVED

1. Insufficiency of the indictment because of
duplicity, which was raised by special demurrer (R.
40).

2. Insufficiency of the bill of particulars filed
by the Government, which was raised by defendants'
objection to the bill and motion to supplement it,
which was denied (R. 85, 87).

3. Refusal to permit defendant Archie C. Shreve
to testify on behalf of himself, and his co-defendant,
with respect to conversations about which Govern-
ments' witnesses had testified, which was raised by
objection by counsel for the Government (R. 761,
763, 764, 768, 769, 770, 779, 797).

4. Refusal to permit defendants to offer proof
of the foregoing conversations, which was raised by
the refusal of the trial judge himself to permit such
offer of proof (R. 790, 791, 792, 793, 797).

5. Admissibility of exemplified copies of deeds,
mortgages, and assignments of mortgages, which was
raised by objection to their admission in evidence
(R. 471, 472).

6. Admissibility of books and records of First
National Bank of Prescott, which was raised by ob-
jection to the evidence (R. 300, 312, 313, 314, 318,
322, 334, 336, 338, 339).

7. Constitutionality of Section 695, Title 28,
USCA, in its application to the admissibility of books
and records of First National Bank of Prescott, which
was raised by objection to the evidence (R. 300, 312,
313, 314).

8. Admission of books and records of Security

(10)

Building and Loan Association, Arizona Holding Cor-
poration and Century Investment Trust, which was
raised by objection to the evidence (R. 411).

9. Admission of testimony of Government wit-
nesses based upon summaries of books and records
of Security Building and Loan Association, Arizona
Holding Corporation and Century Investment Trust,
which was raised by objection to testimony (R. 658,
695).

10. Admitting in evidence a pamphlet relating
to Century Investment Trust bearing fac-simile sig-
nature of defendant Jesse H. Shreve, which was
raised by objection to the evidence (R. 723).

11. Admitting in evidence a mortgage executed
by Wm. H. Perry to Yavapai County Savings Bank,
which was raised by objection to the evidence (R.
547).

12. Admitting in evidence sheriff's deed exe-
cuted to Yavapai County Savings Bank, which was
raised by objection to the evidence (R. 551).

13. Admitting testimony of Government's wit-
ness Fierstone based upon his summary of books
of Century Investment Trust relating to transac-
tions after October 24, 1931, which was raised by
objection to the evidence (R. 703, 704).

14. Refusing to permit defendants' witness
Crane, a certified public accountant, to testify with
regard to accepted accounting principles, raised by
objection by counsel for the Government (R. 834).

15. Permitting Government's witness York to
testify to communications with his daughter, which
was raised by objections to the evidence (R. 560,
561).

16. The charge of the trial court with respect
to proof of withdrawal of defendants from the

(II)

schemes alleged, which was raised by exception to
the charge (R. 896).

17. Refusal of the trial court to charge the jury-
to disregard representations alleged in the indict-
ment with regard to paid-in capital stock, which was
raised by defendant's requested instructions (R. 898).

18. Insufficiency of the evidence to show that
defendants mailed, or participated in the mailing,
of the indictment letters, which was raised by motion
for directed verdict (R. 101, 730, 849).

SPECIFICATION OF ASSIGNED ERRORS

Appellants rely upon the following Assignments
of Error:

I (R. 904).

II (R. 905).

III-IV-V-VI-VII (R. 905 to 915).
VIII-IX-X-XI-XII (R. 915 to 920).
XIII-XIV-XV-XVI (R. 922 to 926).
XVIII-XIX-XX (R. 928 to 932).
XXI-XXII (R. 938, 939, 940).

XXIII (R. 941).

XXIV (R. 942).

XXV R. 943).

XXVI-XXVII-XXVIII-XXIX (R. 946 to 950).
XXXII-XXXIII-XXXIV-XXXV (R. 953 to 955).

ARGUMENT OF THE CASE

FIRST: THE TRIAL COURT ERRED IN OVERRULING DE-
FENDANTS' SPECIAL DEMURRER WHICH ATTACK THE IN-
DICTMENT FOR DUPLICITY. THE ALLEGED FRAUDULENT
SCHEMES ARE PLEADED IN COUNTS ONE AND FOUR OF THE
INDICTMENT. BY THE LANGUAGE EMPLOYED IN COUNT
ONE OF THE INDICTMENT, THE SCHEMES THERE PLEADED
ARE INTERWOVEN WITH THE SCHEMES PLEADED IN COUNT
FOUR. IN THIS WISE THE SEVERAL COUNTS OF THE IN-
DICTMENT ARE JOINED.

(12)
ASSIGNMENT OF ERROR

I

The Court erred in overruling the special de-
murrer of defendants to the indictment, for the rea-
son the indictment is duplicitous in that the fraudu-
lent schemes, as alleged in counts one and four of
the indictment, are interwoven, and the several counts
of the indictment are joined, to which rulings de-
fendants excepted (R. 904).

Defendants' special demurrer attacked the in-
dictment on the ground, among others, that it is
duplicitous (R. 39, 40 (d) (c)). The special demurrer
was overruled, and defendants excepted (R. 101,
181 ).• '

The indictment as it appears after the dismissal
of the conspiracy charge (R. 182) is divided into
two separate presentments. The first, comprising
the first three counts, sets forth schemes and arti-
fices for obtaining money by means of false pre-
tenses, representations and promises in their rela-
tion to the Security Building and Loan Association
(R. 1 to 14). The second, comprising counts 4, 5, 6,
7, 8, 9, 10 and 11, sets forth different schemes and
artifices for obtaining money by means of false pre-
tenses, representations and promises in their relation
to the Arizona Holding Corporation and the Century
Investment Trust (R. 14 to 38).

The following allegations appear in the second
paragraph (count one) of the indictment:

6. On the former appeal of the case, this court said the
sufficiency of the indictment to charge an offense was not chal-
lenged. Shreve vs. U. S., 77 Fed. (2nd) 2, 4. The indictment
was then challenged by special demurrer (Record on former ap-
peal No. 7460 p. 98-e), assigned as error (Record on former ap-
peal! id 675 (5) and briefed (Brief of Shreves and Evans, id p.
129)' The lower court, after the reversal by this Ck)urt, again
considered the special demurrers an doverruled them (R. 101, 181).

(13)

'That prior to the dates on which the several
letters, statements and writings hereinafter re-
ferred to were placed and caused to be placed in
the United States Post Office, as hereinafter in
the several counts of this indictment alleged * * *"
(R. 2)J

And towards the end of the third paragraph
(count one) of the indictment it is alleged as follows:
''the defendants would make and cause to be
made the pretenses, representations and promises
hereinafter set forth * * *"° (R. 3).
Thus, the first artifices and schemes run through
the whole indictment, although the first three let-
ters are pleaded in execution of the first artifices
and schemes only (count one) and the next eight
letters are pleaded in execution of the second artifi-
ces and schemes only (count two). In this method,
therefore, the artifices and schemes are interwoven,
although separated by numerical division only.

An indictment in several counts is a collection of
separate bills, and every separate count should charge
a defendant as if he had committed a separate offense.
De Jianne vs. U. S., (CCA3) 282 Fed. 737, 742; 31
C. J. 742. Counts may refer to each other for the
purpose of supplying allegations common to all (31
C. J. 744) but here we have a comingling of offenses
since different schemes and artifices, involving diff-
erent corporations, are separated by numerical di-
vision only.

It may be contended that the intention of the
pleader to separate the artifices and schemes in the
indictment appears by implication or intendment,

7. The correct recital should be 'as hereinafter referred to in
this and the next two counts of this indictment".

8. The correct recital should be "hereinafter set forth in this
count of this indictment".

(14)

but that is not enough, because the indictment charges
crime, and therefore must necessarily state the crime
with certainty and particularity. Nothing can be
left to implication or intendment. 31 C. J. 659, 660.®
Giving, therefore, a meaning to words and phrases
which will not distort them, the indictment is dup-
licitous and therefore bad. Creel vs. U. S. (CCA8)
21 Fed. (2nd) 690.

SECOND: THE BILL OF PARTICULARS ORDERED BY
THIS COURT IN ITS OPINION REVERSING THE JUDGMENT
ON THE FORMER APPEAL, DOES NOT COMPLY WITH THE
OPINION, NOR WITH DEFENDANTS' DEMAND FOR A BILL OF
PARTICULARS AS ALLOWED BY THE TRIAL COURT.. THE
BILL IS EVASIVE, INDEFINITE, AND INCOMPLETE, AND IT
DOES NOT FAIRLY ADVISE DEFENDANTS OF THE EVIDENCE
THEY WERE REQUIRED TO MEET. THE TRIAL COURT THERE-
FORE ERRED IN OVERRULING DEFENDANTS' OBJECTION TO
THE BILL, AND IN DENYING DEFENDANTS' MOTION TO SUP-
PLEMENT IT.

ASSIGNMENT OF ERROR

II

The Court erred in overruling defendants' ob-
jections to the bill of particulars filed by the Govern-
ment, and denying defendants' motion to supplement
said bill of particulars, because (a) it is evasive, in-
definite, uncertain and incomplete; (b) because the
bill refers defendants to the transcript of testimony,
and exhibits received in evidence, at the former trial
of the cause; and (c) because the bill does not ad-
vise the Court or defendants of the evidence defend-
ants were required to meet, to which rulings defend-
ants excepted (R. 905).

In reversing this case on the former appeal this

9. On the former appeal, counsel for the Government met
this argument by saying that "any person of ordinary intelli-
gence" will readily see what these allegations mean (appellee's
brief in No. 7460, p. 25). Assuming that is true, It Ls the very
thing the law condemns.

(15)

Court, contrary to the ruling of the lower court, held
that the defendants were entitled to a bill of particu-
lars before the retrial of the case. Shreve vs. U. S.
77 Fed. (2nd) 2, 9. The defendants filed a supple-
mental motion and demand for a bill of particulars
and the trial court granted it (R. 60). The United
States Attorney filed the bill (R. 60) and defendants
objected to the sufficiency of it, and moved that it
be supplemented (R. 85, 87). This objection was over-
ruled by the trial court, and defendants excepted (R.
101, 181).

The motion to supplement the bill pointed out in
detail wherein it failed to meet the demand for it.
The bill, as filed, discloses that it left much to con-
jecture. For illustration, in answer to question 9 of
the demand, the bill refers defendants to exhibit No.
314 introduced at the former trial (R. 68). In an-
swer to questions 14 (R. 72) 16 (R. 74) 17 (R. 75)
18 (R. 76) and 20 (R. 78) the bill refers defendants
to exhibits 110 to 118, inclusive, introduced at the
former trial. The bill is typified by the following :

"This question (question 16 of the demand)
is answered by the books and records of the Cen-
tury Trust introduced at the former trial, ex-
hibits numbers 110 to 118 inclusive, and as ampli-
fied by the testimony of the witness C. K. Fier-
stone at the former trial." (R. 74).
The United States Attorney, apparently realiz-
ing the insufficiency of the bill, closes it with this
nebulous statement:

''And, as a further answer to all of the ques-
tions asked in the defendants' request for a bill
o:^ particulars, the Government states that all of
the matters requested and not here specifically
answered may be found in the transcript of the
testimony at the former trial, all of which was

(16)

testified to in the presence of the defendants and
their attorneys." (R. 81).

The solving of the ramifications of this case, as
aptly stated by this Court on the former appeal, was
still imposed upon defendants by the bill as filed.

The office of a bill of particulars is clear. It is
stated by this court in Kettenbach vs. U. S., 202 Fed.
377, 383, quoting with approval from U. S. vs Adams
Express Company, 119 Fed. 240, as follows:

"The office of a bill of particulars is to ad-
vise the court, or more particularly the defend-
ant, of what facts more or less in detail, he will
be required to meet, and the court will limit the
government in its evidence to those facts set forth
in the bill of particulars."

That decision is not compiled with as the bill
stands. On the contrary, defendants were required
to delve into exhibits, books and records, and into an
unofficial transcript of testimony, to conjecture as
to the evidence which would be produced against
them. Besides, as we shall show under subsequent
Assignments of Error, and particularly by the next
Assignment of Error, the trial court did not limit
the Government's evidence to the facts set forth in
the bill of particulars.

THIRD: THE TRIAL COURT ERRED IN PERMITTING
GOVERNMENT'S WITNESS FIERSTONE TO TESTIFY THAT
STOCK OF SECURITY BUILDING AND LOAN ASSOCIATION
HELD BY CENTURY INVESTMENT TRUST VALUED AT $99,457.50
WAS CHARGED OFF AS A LOSS ON DECEMBER 16, 1931, BE-
CAUSE THAT IS A TRANSACTION WHICH OCCURRED AFTER
THE LAST DATE OF ANY INDICTMENT LETTER OR PRINTED
MATTER, AND BECAUSE IT OCCURRED SUBSEQUENT TO THE
DATE ANY SCHEME WAS EXECUTED AS FIXED BY THE BILL
OF PARTICULARS.

ASSIGNMENT OF ERROR
XXIV

The Court erred in permitting Government's wit-

(17)

ness Fierstone to testify, as an auditor for the Gov-
ernment, relative to transactions which occurred after
October 24th, 1931, over the following objection and
exception by counsel for defendants:

(The witness testified on direct examination) :
''There is also a charge against the accounts re-
ceivable to the Arizona Holding Corporation of
$11,586.07, and on December 16th, 1931—

MR. HARDY: We object to any testimony,
your Honor, after October 24th, 1931, because
testimony after that date is not within the con-
fines of the Bill of Particulars or the indictment.

THE COURT: Go ahead.

MR. HARDY: Exception.

THE WITNESS: On December 16th, 1931,
the stock of the Guardian Western Company, then
being valued at $845,000.00, was sold along with
the other assets of the company to the Arizona
Holding Corporation, this stock being sold for
231,145.05.

The witness continuing: That $231,146.05
was the purchase of this Guardian Western stock.
Well, at that time the assets of Century Invest-
ment Trust were sold to the Arizona Holding
Corporation and the liabilities were transferred,
and the Century Investment Trust received a note
from the Arizona Holding Corporation for the
difference between the two, amounting to $250,-
000.00. The books do not record anywhere the
payment of the note of the Arizona Holding Cor-
poration to the Century Investment Trust. I be-
lieve that is still an asset of the company.

MR. FLYNN: Now, can you tell from the
books, Mr. Fierstone, what became of the stock

(18)

of the Building & Loan Association which was
held by the Century Investment Trust?

THE WITNESS: On December 16th, 1931,
it was being carried at a valuation of —

MR. HARDY: Now, we make that same ob-
jection, your Honor. It is a transaction which
occurred after the last date in the Bill of Par-
ticulars.

THE COURT: He may answer.

MR. HARDY: Exception.

THE WITNESS: On December 16th, 1931,
it was being carried at a valuation of $99,457.50
and on that date it was charged off as a loss."
(R. 942).

Government's witness Fierstone was an auditor
employed in the Division of Investigation of the Fed-
eral Government (R. 688). He audited the books of
Century Investment Trust and testified from this
audit as a witness for the Government (R. 689).
His testimony quoted in the foregoing Assignment of
Error discloses that stock of Guardian Western Com-
pany, valued at $845,000, was sold on December 16,
1931, with other assets of that company, to Arizona
Holding Corporation for $231,145.05 (R. 703).
Guardian Western Company is not mentioned in the
indictment, nor in the bill of particulars. The wit-
ness further testified that the assets of Century In-
vestment Trust were sold, and its liabilities trans-
ferred, to Arizona Holding Corporation, and Century
Investment Trust received a note from Arizona Hold-
ing Corporation for the difference amounting to
$250,000 (R. 704). Thereupon counsel for the Gov-
ernment inquired from the witness as to what became
of the stock of Security Building and Loan Associa-
tion which was held by Century Investment Trust, to

(19)

which defendants objected because the question in-
volved a loss transaction which occurred after Oc-
tober 24, 1931, which is the last date of any indict-
ment letter, or scheme fixed by the bill of particulars
(R. 703, 704). However, the witness was permitted to
answer that the stock of Security Building and Loan
Association, held by Century Investment Trust, was
carried at a value of $99,457.50, and, on December
16, 1931, was charged off as a loss (R. 704).

This testimony with respect to this large item of
loss, involving as it does the three corporations nam-
ed in the indictment, went, therefore, to prove the
insolvency of those corporations as alleged in the in-
dictment (R. 4, 16). The bill of particulars fixed
the devising of the schemes between May 1928, and
October 24, 1931 (R. 61). October 24, 1931, is the
latest date of any indictment letter (R. 11) and the
trial court so charged the jury (R. 876). The testi-
mony went beyond October 24, 1931, and thus, in
the language of this court in Kettenbach vs. U. S.,
supra, the trial court did not "limit the Government
in its evidence to those facts set forth in the bill of
particulars". Defendants were not advised that they
would be required to meet testimony of this character,
and obviously, in view of the limitation of the last
date of the schemes fixed in the bill, the receipt of
it placed defendants at a prejudicial disadvantage.'®

Mass vs. U. S., (CCA8) 93 Fed. (2nd) 427, 435,

436.

It is true the trial court charged the jury that
evidence relating to transactions subsequent to Oc-

10. other pertinent testimony of transactions occurring after
October 24, 1931, are found in the testimony of Government's
witness Watt (R. 261, 608), Hammons (R. 524), and Fierstone
(R. 705)..- In order not to offend against the admonition of this
court with respect to numerous assignments of error, no error
is assigned upon the testimony of these witnesses, but reference
is made to it for the purpose of enlarging the error which is
assigned.

(20)

tober 24, 1931, could only be considered for the pur-
pose of determining intent (R. 876) but defendants
nevertheless were entitled to be advised as to what
evidence the Government would offer to prove intent.
Kettenbach vs. U. S., supra.

FOURTH: THE WITNESSES HOBBS AND PERKINS TES-
TIFIED ON BEHALF OF THE GOVERNMENT CONCERNING CON-
VERSATIONS WITH DEFENDANTS JESSE H. SHREVE AND
ARCHIE C. SHREVE. THE TRIAL COURT ERRONEOUSLY RE-
FUSED TO PERMIT DEFENDANT ARCHIE C. SHREVE TO GIVE
HIS VERSION OF THESE CONVERSATIONS, OR TO PERMIT
DEFENDANTS TO MAKE OFFER OF PROOF IN RESPECT
THERETO.

ASSIGNMENTS OF ERROR
III

The Court erred in refusing to permit defendant
Archie C. Shreve to testify on his own behalf, and
on behalf of defendant, Jesse H. Shreve, concerning
a conversation between Government's witness Glen
0. Perkins, said defendant Jesse H. Shreve, and him-
self, about which said Government's witness Perkins
had previously testified. The grounds urged for the
objection, and the exception taken, and the full sub-
stance of the testimony rejected, are as follows:

The witness Archie C. Shreve testified on
direct examination: "At or about the time the
Century Investment Trust and the Security Build-
ing and Loan Association opened offices in Phoe-
nix, I had a conversation with regard to the fu-
ture business of those corporations at the office
of the Security Building and Loan Association
and the Century Investment Trust, in the Adams
Hotel Building, here in Phoenix. My brother J.
H. Shreve, Glen 0. Perkins and myself were pres-
ent at that conversation. To the best of my recol-
lection, it was said at that meeting that the com-
panies had opened for business, including the

(21)

Building and Loan Association at Phoenix, and
things were not going so well. It was soon after
the so-called great crash in 1929 and my brother
J. H. Shreve came over to Phoenix from San
Diego and stated that —

MR. FLYNN : Just a minute. At this time,
your Honor, we object to the conversation between
the defendants, for the reason that it is inad-
missable. It is self-serving conversation between
the defendants in this case.

THE COURT: Yes, purely self-serving.

THE COURT: If you want to get in a state-
ment in the record that Perkins made, that is
different. Conversations between these people are
purely self-serving.

MR. HARDY: Not as between persons who
had a conversation at which the witness Perkins
was present, your Honor.

THE COURT : I say, if you want to get into
the record Perkins' testimony —

MR. HARDY: Associate him with the com-
panies. All right. Q. What was said to Mr. Per-
kins at that time?

MR. FLYNN : Object to that, no foundation
is laid for it; no impeaching question was asked
Mr. Perkins about any such conversation when
he was on the stand.

THE COURT: I don't recall.

MR. HARDY: Certainly, Mr. Perkins testi-
fied about a conversation which he had with both
Archie Shreve and J. H. Shreve.

THE COURT: All right, you have your con-
versation.

MR. HARDY: For the purpose of the rec-
ord, may we have an exception, and I will try

(22)

to ask another question.
THE COURT: Yes, indeed.

MR. HARDY : Q. Now, you have stated that
about this time there was a conference between
Glen 0. Perkins, J. H. Shreve and yourself?

A. There was.

Q. At Phoenix, Arizona?

A. Yes, sir.

Q. Was this conversation directed to Mr. Per-
kins, or did it, in any way, involve him with re-
spect to a connection with either the Century In-
vestment Trust or the Security Building and Loan
Association?

A. It did, and about the conduct of this
business.

Q. Now, state it.

MR. FLYNN : Object to it on the ground it
is self-serving.

THE COURT: You are right back where
you started from.

MR. HARDY: Your Honor ruled that the
question may not be answered?

THE COURT : I ruled that it is purely self-
serving.

MR. HARDY: Exception.

(The witness continuing) : Mr. Perkins at that
time had a conversation with me, or J. H. Shreve
in my presence.

Q. What was that conversation?

MR. FLYNN : We object on the ground there
is no foundation laid for any impeaching state-
ment as to Mr. Perkins' statement, no impeaching
question having been asked him at the time he
was on the stand, and it is self-serving.

(23)

MR. HARDY : It is not laid for the purpose
impeachment. The question was asked and pre-
dicated in regard to future business of the Cen-
tury Investment Trust and the Arizona Holding-
Corporation. It is not asked for the purpose of
impeaching —

MR. FLYNN : Well, it would be immaterial.

THE COURT: Well, it would only be self-
serving.

MR. HARDY : The conversation Mr. Perkins
had with either of these defendants?

THE COURT : Well, if you want to impeach
the witness, you have to lay the foundation for
it always.

MR. HARDY: I understand that.

THE COURT: Well, I am not going to
argue with you.

MR. HARDY: Exception." (R. 905).

IV
The Court erred in refusing to permit defendant
Archie C. Shreve to testify on his own behalf, and
on behalf of defendant, Jesse H. Shreve, concerning
a conversation between Government's witness Glen
0. Perkins and John C. Hobbs, and said defendant
Jesse H. Shreve, and himself, about which said Gov-
ernment's witnesses Glen 0. Perkins and John C.
Hobbs had previously testified. The grounds urged
for the objection, and the exception taken, and the
full substance of the testimony rejected, are as fol-
lows:

The witness Archie C. Shreve testified on
direct examination: "I heard John C. Hobbs, who
was a witness for the Government, testify on the
occasion when he and Mr. Perkins came to San
Diego in the summer or fall of 1931, and had a

(24)

conference with me and J. H. Shreve with ref-
erence to the affairs of the Security Building
and Loan Association. I believe Mr. Perkins and
my brother Daniel H. Shreve telephoned me and
asked for J. H. Shreve or myself to come to Phoe-
nix. I told them it was not possible for us to
come here any they wanted to hold a conference
with us and were attempting to borrow some
funds for the Building and Loan Association.
As to who was to make the loan I could not say.
Mr. Perkins and Dan Shreve were the people ask-
ing for a loan on behalf of the Security Building
and Loan Association or the Century Investment
Trust. Mr. Perkins and Mr. Hobbs came to San
Diego at their request.

Q. And what was said or done after they
arrived in San Diego?

A. Mr. Perkins and Mr. Hobbs and myself,
my brother J. H. Shreve —

MR. FLYNN: We object to any conversa-
tion at this conference, on the ground that no
proper foundation has been laid, and neither Mr.
Hobbs nor Mr. Perkins, when they were on the
stand, no impeaching questions were asked, and
the further ground it is self-serving.

THE COURT: Sustained.

MR. HARDY: Well, at this time Mr. Hobbs
and Mr. Perkins came to San Diego, California,
was there any discussion with respect to the busi-
ness of either the Security Building and Loan
Association, the Century Investment Trust or the
Arizona Holding Corporation?

A. There was a discussion of the business
of the Security Building and Loan Association,
and the other companies may have been mention-
ed.

(25)

Q. And what was the nature of that dis-
cussion?

MR. FLYNN: We object to that on the
ground it is immaterial, it is self-serving, and no
foundation being laid for any impeaching ques-
tion.

THE COURT: Yes, the same question.

MR. HARDY: Exception.

Q. Did you at any time, while these corpora-
tions, the Arizona Holding Corporation and the
Security Building and Loan Association and the
Arizona Holding Corporation were functioning,
have any discussion with Mr. Perkins or Mr.
Hobbs about the overhead expenses of those com-
panies?

A. I did.
Q. Will you state please what that conversa-
tion was?

MR. FLYNN : I object to that on the ground
that no time is fixed, that it is self-selving ; no
foundation being laid for an impeaching question.

THE COURT: Sustained.

MR, HARDY: Exception." (R.909).

The Court erred in refusing to permit the defend-
ants to make an offer of proof with regard to the
excluded testimony concerning the conversations be-
tween the defendants and the said Glen 0. Perkins
and John C. Hobbs, referred to in Assignments of
Error III and IV. The error assigned is manifested
by the following proceedings:

"MR. HARDY: May it please your Honor,
in reference to the three questions which were
asked of this witness pertaining to the conversa-

(26)

tion on December 20th, and the conversation early
in the year 1930. and a conversation in Febru-
ary, 1930, between this defendant and the de-
fendants J. H. Shreve and Glen 0. Perkins, and
J. C. Hobbs, which, upon objection by the United
States Attorney, were held inadmissible, and
which objection was sustained, may we have the
privilege at this time, for the purpose of the rec-
ord only, of making an offer of proof in regard
to those questions?

THE COURT: No.

MR. HARDY : May we file with the Clerk of
the Court a written offer?

THE COURT : You can do that if you want
to, but you can't get it before the jury.

MR. HARDY: Can we make it without the
presence of the jury?

THE COURT : No, you may write it out.

MR. HARDY: And may it be considered as
a part of the evidence?

THE COURT: It would not be a part of
the evidence because it is not admitted.

MR. HARDY: As part of the record in this
case?

THE COURT : You can file it with the Clerk.

MR. HARDY: Then, may we have an ex-
ception to the refusal to be permitted to make
the offer?

THE COURT: Yes." (R. 911).

VI

The Court erred in refusing to permit defendant
Archie C. Shreve to testify on his own behalf, and
on behalf of his co-defendant Jesse H. Shreve, con-
cerning a conversation between Government's wit-

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ness Glen 0. Perkins, said defendant Jesse H. Shreve,
and himself, with regard to Government's Exhibit
207, about which said Government's witness Glen 0.
Perkins had previously testified. The grounds urged
for the objection, and the exception taken, and the
full substance of the testimony rejected, are as
follows :

''Q (By Mr. Hardy: Now, Mr. Shreve, I hand
you Government's Exhibit No. 207, which is a
pamphlet or a circular of the Century Investment
Trust, and which was identified by Mr. Perkins,
the witness for the Government in this case. Did
you ever have any conversation with Glen 0.
Perkins with respect to that circular?
A. I have.

Q. State what the conversation was.
MR. FLYNN: Object to it on the ground
the time and place and those present has not
been fixed.

MR. HARDY : Q. Well, can you fix the time
and place and who was present at the time you
had this conversation with Mr. Perkins?

A. Early in 1930, January or February.
Q. Where?

A. At the office of the Century Investment
Trust, Adams Hotel Building, Phoenix, Arizona.
Q. Who was present?
A. Myself and J. H. Shreve.
Q. Who else?
A. No one else.
Q. Was Mr. Perkins present?
A. I said Mr. Perkins, myself and J. H.
Shreve.

Q. What was the conversation with Mr. Per-
kins in respect to that circular?

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MR. FLYNN : We object to it on the ground
it is hearsay, self-serving, and no foundation has
been laid for any impeaching question.

THE COURT: Probably is self-serving.

MR. HARDY: Very well, your Honor. May
we have an exception and may we also ask to
make an offer of proof by filing it with the Clerk
in connection with this Exhibit No. 207?

THE COURT: Very well.

MR. HARDY: And that the offer of proof
is denied, and we may have an exception to the
denial." (R. 913).

XXXV

The Court erred in refusing to permit defendant
Archie C. Shreve to testify on his own behalf and
on behalf of defendant Jesse H. Shreve, concerning
a conversation between Government's witness Glen
0. Perkins, said defendant Jesse H. Shreve, and him-
self, about which said Government's witness Perkins
had previously testified. The grounds urged for the
objection, and exception taken, and the full substance
of the testimony rejected, are as follows:

The witness Archie C. Shreve testified on di-
rect examination : "Mr. Perkins had a conversa-
tion with Dan Shreve and J. H. Shreve and myself
in San Diego in connection with this matter in
February, 1930.

Q. And how did that arise and what was
done in that conference?

MR. FLYNN: We object to that on the
ground, first, the question is a double question,
and, second, as far as the last part is concerned,
it is immaterial, and calling for a conversation
that would be self-serving.

Q. Well, what was done with respect to your

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connection with these companies at that confer-
ence?

A. Daniel H. Shreve, and when I refer to
Dan, I mean Daniel H. Shreve all the time, had
made two trips to Phoenix, and with the idea of
taking —

MR. FLYNN : Just a minute, may I ask the
witness a question?

MR. HARDY : Well, I don't think it is prop-
er.

MR. FLYNN: I want to know whether he
is answering your question or one he thought
up himself. He asked what was done. You are
talking about Dan Shreve, so it is —

THE COURT: I don't know what he is
talking about.

MR. FLYNN: I want to know what Dan
Shreve did before or after this happened. The
question was directed to what happened after.

THE WITNESS: I want to tell you what
happened at the conversation with Dan Shreve,
Mr. Perkins and J. H. Shreve and myself, when
we met in San Diego, California.
MR. HARDY: State that.

MR. FLYNN: State the conversation? We
object to the conversation.

THE COURT: Why, it is not admissable,
and I don't want any more of it. You are just
wasting the Court's time by those tactics." (R.
955).

VII
The Court erred in refusing to permit defend-
ants to make an offer of proof concerning the con-
versations between the defendant Archie C. Shreve
and the said Glen 0. Perkins, referred to in Assign-

(30)

ment of Error VI, and for the reasons set forth in
that Assignment of Error (R. 914).

At the threshold of defendants' case, the trial
court refused to permit defendant Archie C. Shreve
to testify to conversations about which Government's
witnesses Perkins and Hobbs had previously testi-
fied (R. 760, 761, 765, 768, 769, 770, 771, 778,
779, 797). Perkins organized Arizona Holding Cor-
poration for the purpose of raising funds to or-
ganize Security Building and Loan Association (R.
630). The organization was not a plan of defend-
ants, nor did they become associated with it until
Perkins and Hobbs met difficulties, and then only at
their solicitation (R. 633, 634). Perkins was indicted
for the same offenses for which these defendants
stand convicted, and he was convicted of some of them
on the former trial (R. 180). Since that conviction
he was granted a severance, and became a witness
for the Government against defendants on this re-
trial of the case (R. 181). Hobbs joined Perkins in
promoting Arizona Holding Corporation, and remain-
ed with that company, as well as Security Building
and Loan Association, and Century Investment Trust,
as did Perkins, until they failed. Perkins and Hobbs
were so intimately associated with these companies,
that conversations between them and defendants con-
cerning matters of policy were as important to de-
fendants as they were to the Government." Perkins
as a witness for the Government, testified as follows :

"I had a conversation with Jesse Shreve when
he was here just before the companies closed.
That is the time Jesse Shreve told me he had made

11. Both were officers of the corporations named in the in-
dictment. They signed indictment letters as such officers (R.
8, 19, 23, 27, 28, 30).

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an arrangement with Louis B. Whitney, an at-
torney in Phoenix, and Neri Osborne, Jr., a resi-
dent of Phoenix, to place these corporations in
receivership and appoint Neri Osborne receiver.
He spoke of liquidating the companies at a prior
date. At the time of these conversations with Jes-
se Shreve in regard to these liquidations, Archie
Shreve was present. That was before the conver-
sation with Jesse H. Shreve in San Francisco.
Archie was present the first time he spoke about
liquidating the companies. That was in his home
in San Diego. Archie Shreve, Jesse H. Shreve
and myself were present. I think it was early in
November of the year the building and loan clos-
ed. The building and loan closed in 1931. Mr.
Whitney and Mr. Osborne were not discussed in
the conversation in San Diego in which Jesse
Shreve, Archie Shreve, John Hobbs and myself
were present in Jesse Shreve^s home. This con-
versation in San Diego was prior to the reference
to these gentlemen." (R. 641, 642).'''

Hobbs, as a witness for the Government, testi-
fied as follows:

''Before the building and loan association
closed, I made a trip to San Diego by airplane.
I think it was about a month before the building
and loan association closed. Glen Perkins was
with me. J. H. Shreve and A. C. Shreve met me.
I had a conversation with them at that time which
was to the effect that business conditions all over
the country were poor, that we had over here
a number of requests for withdrawals, and in
view of the situation a^ a whole, it was perhaps
best to liquidate the building and loan. I am

12. The wtness Perkins also detailed other conversations
relating to defendants (R. 641, 642, 643, 645).

(32)

not certain that I was requested to sign any-
thing at that time. Some time I was requested
to sign a schedule in bankruptcy. I think that
was shortly before the time the building and loan
association closed. We had requests for with-
drawals and in all cases were not able to fill the
requests. We didnH have the money. I can't fix
the time definitely in my mind but I know I was
asked to sign a schedule about the time that the
building and loan association went into bank-
ruptcy."

Question by Mr. Peterson, counsel for the Gov-
ernment: ''Can you recall who requested you?"
The witness: "I am not certain. It was either
J. H. Shreve or Dan. It might has been Archie.
I don't know. / did, not sign the bankruptcy
schedule.'' (R. 389 to 392).

1. Defendants' version of these conversations was not
immaterial, self-serving, or impeaching, which were the
only grounds of objection interposed by Grovernment coun-
sel. The conversations were opened by the Government and
defendants were then entitled to give the whole of their
version of it.

Testimony of Perkins and Hobbs with regard to
these conversations was important, because it re-
ferred to the indictment allegations of insolvency of
the corporations named in the indictment, and also
to defendants' connection with these corporations.'^
Hobbs testified he was requested by one of the de-
fendants, or Daniel H. Shreve (a deceased defend-
ant) to sign a bankruptcy schedule, and refused (R.
390 to 392). This inference was as damaging as it
was significant. The whole of the excluded testi-
mony was no less important, because it dealt with

13. Counts one and four of the indictment allege schemes
and artifices to defraud, which are wholly predicted upon insol-
vency of the corporations named in the indictment (R. 1, 14).

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matters about which Government witnesses Perkins
and Hobbs had previously testified, as we have shown
above. The conversations sought to associate defend-
ants with the management of these corporations up
to the time they failed. The defendant Archie C.
Shreve would have disavowed such association had
he been permitted to testify (R. 792, 793). Hobbs
had already substantiated this profered disavowal
by showing that after Daniel H. Shreve came to Phoe-
nix in the spring of 1929 or 1930, he took charge of
the business (R. 403, 404). The defendants both lived
in San Diego and were engaged in business there.
It is significant and important in this connection
that neither defendant signed any indictment letter.

The repeated objections by counsel for the Gov-
ernment that this excluded testimony was immaterial,
self-serving, and would impeach the witnesses Per-
kins and Hobbs are without support in law.'"*

'The self-serving acts and declarations of ac-
cused are not admissable in his behalf, unless
they are part of the res gestae, or unless they
were done or made in a conversation part of
which has already been introduced in evidence
by the state." 16 C. J. Sec. 1265 (p. 636) re-
ferring to Sec. 1111 (p. 571) which is as fol-
lows:

''Evidence is sometimes admitted, or its ad-
mission is held not error, on the ground that
similar evidence has been introduced, or proof of
the same character has been made, by the ad-
verse party. This is but common fairness. * * *
It is well settled that, where either the state or
accused introduces part of a conversation, trans-

14. Instances of these objections, and the trial court's rul-
ings sustaining the objections, are found at the following pages
of the record: (R. 761, 762, 763, 764, 768, 769, 770, 778, 779, 797).

(34)

action, or writing, the opposing party is entitled
to introduce other parts or the whole of the con-
versation, transaction, or writing, and it is some-
times so provided by code or by statute. Limi-
tations to the rule are that the evidence offered
must relate to the same subject matter, and must
explain and be necessary to a full understanding
of that already introduced." C. J. Sec. 1111 (p.
571).

The text above quoted cites in support Carver vs.
U, S., 164 U. S. 694, 17 Sup. Ct. 228, 41 L.Ed. 602.
There the Supreme Court reversed a judgment of
conviction because the defendant was denied the
opportunity to prove his version of a conversation
which had been introduced against him. The Su-
preme Court says:

"The sixth assignment of error was taken to
the refusal of the court to permit the defendant
to prove by Mary Belstead and Mary Murray the
declarations of defendant, and what he said to
deceased, and what she said to him, at the place
of the fatal shot, immediately after the shot was
fired, for the reason that the same was part of
the res gestae, and was also a part of the con-
versation given in evidence by the government
witnesses. We fail to understand the theory upon
which this testimony was excluded. Hays and
Brann, two witnesses for the government, had
testified that they had heard the shots fired and
the scream of a woman; that Brann started for
the place, and met defendant running away; that
defendant went back towards the woman, and
then returned again, when Brann caught him
and took him back to the woman, about 30 yards.
About this time Hays came up, and and both
testified as to the conversation or exclamations

(35)

that were made, between deceased and the defend-
ant. Defendant's two witnesses, Belstead and
Murray, appear to have come up about the same
time, and, whether the conversations that took
place between defendant and deceased at that
time was part of the res gestae or not, it is evi-
dent that it was practically the same conversa-
tion to which the government's witnesses had
testified. If it were competent for one party to
prove this conversation, it was equally competent
for the other party to prove their version of it.
It may not have differed essentially from the
government's version, and it may be that defend-
ant was not prejudiced by the conversation as
actually proved; but where the whole or a "part
of a conversation has been put in evidence by one
party, the other party is entitled to explain, vary,
or contradict it.'^^^ (Italics supplied).

See: Nichols Applied Evidence, Vol. 5 pps.
4762 to 4767.

Thus, even where a statute limits the quantity
of proof, testimony concerning a conversation ex-
cluded by the statute having been introduced by one
party, warrants the adversary party to give his ver-
sion of it. It is so decided by the Supreme Court in
Bogk vs. Gassert, 149 U. S. 17, 24, 13 Sup. Ct. 738,
37 L.Ed. 631, where it is stated:

*'In rebuttal, Steele and Gassert were put
upon the stand and asked as to the conversation
which took place at the attorney's office at the
time the deeds and contract to reconvey were

15. In the case quoted from the testimony excluded was
offered by witnesses for defendant and not by the defendant
himself. The situation is srengthened here because a defendant
himself offered to give the excluded testimony. He should have
been permitted to give the testimony not only on his own behalf
but also on behalf of his co-defendant.

(3G)

made. The conversation was admitted, and de-
fendant excepted. Now, while this might have
been improper as original testimony, it would
have been manifestly unfair to permit Bogk to
give his version of the transaction, gathered from
conversation between the parties, and to deny the
plaintiffs the privilege of giving their version
of it. The defendant himself, having thrown the
bars down, has evidently no right to object to the
plaintiff's having taken advantage of the license
thereby given to submit to the jury their un-
derstanding of the agreement. The Code is merely
in affirmance of the common-law rule, and was
evidently not intended to apply to a case of this
kind."

Stevenson vs. U. S. (CCA5) 86 Fed. 106, 110,
applies the rule and cites Carver vs. U. S., Supra,
in approval.

The objection by Government counsel that the
rejected testimony was immaterial is refuted by the
foregoing authorities. The objection that it would
be impeaching has no support, because, rather, it was
defendants' version of something already testified
against them, so that objection is also refuted by the
foregoing authorities. It is not self-serving under
the foregoing authorities, and because the contrary
has been decided by this Court.

Pernn vs. U. S. (CCA9) 169 Fed. 17, 24.
In accord are:

Nichols Applied Evidence, Vol. 5 p. 4763, 16
C. J. Sec. 1263 (p. 634).
Hinton vs .Welch, 179 Cal. 463, 177 Pac. 282.
Carstensen vs. Ballantyne, 40 Utah 407, 122 Pac.
82, 85.

2. The trial court erred in refusing defendants to make
an offer of proof of this rejected testimony.

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The trial court refused to permit defendants to
make an offer of proof of their version of these con-
versations (Assignments of Error V and VII, supra).
We submit it was unprecedented for the court to deny
this offer of proof.'® The court suggested the offer
could not be made before the jury. Counsel for de-
fendants requested that the jury be excused, which
was denied (R. 790). The court became impatient
with persistence and rebuked counsel for defend-
ants.'"' Counsel for defendants persisted only because
he thought his position was right. '°

In view of the court's rulings, these offers of
proof, as we have shown, were filed with the Clerk
and probably are a part of the record on appeal by
permission only. Since the trial court refused to
entertain the offers, none was before him.

The error pointed out by the foregoing Assign-
ments is plain. The effect is manifestly unfair and
highly prejudicial, alone justifying, as we believe, a
reversal of the judgments.

3. Refusal to permit defendant Archie C. Shreve to
testify with regard to Government's Exhibit 207 concern-
ing a conversation with Government's witness Perkins, was
error.

Government's Exhibit 207 (Assignment of Er-
ror VI, Supra) was identified by Government's wit-
ness Perkins who testified that the facsimile signa-

16. The offer of proof was filed with the Clerk (R. 790, 797).
It is set forth in the Appendix (pp. 1 to 5), and appears at pages
790 to 794 and 797, 798 of the Record.

17. For instance, the learned trial judge said to defendants'
counsel: "Well, I am not going to argue with you." (R. 763).
Again: "Why, it is not admissable, and I don't want any more
of it. You are just wasting the Court's time by those tactics.''
(R. 771). Upon reflection it must now appear that counsel was
only attempting to inform rather than provoke the court. Re-
spect for the Court naturally suppressed counsel.

18. Rule 43 (c) of Civil Procedure of District Courts (effec-
tive Sept. 1, 1938) adopted by the Supreme Court pursuant to
Act of June 19, 1934, requires the trial court to do what the
trial court refused here (See Rule, Appendix p. 5).

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ture thereon is that of defendant J. H. Shreve (R.
653). The exhibit itself discloses that it is the
facsimile signature of J. H. Shreve (R. 724, 727).
Since Perkins gave testimony concerning the exhibit,
by identifying it, then ''the bars were down" for the
defendants ''to take advantage of the license thereby
given to submit to the jury" {Bogk vs. Gassert,
supra) their version of the circumstances connected
with the preparation and distribution of this ex-
hibit.

In convenient order, the next Assignment of
Error XXV should be considered for the purpose
of analyzing the foregoing Assignment of Error VI.

ASSIGNMENT OF ERROR
XXV

Under sub (d) of Rule 24, this Assignment of
Error is copied in full in the Appendix at page 6.
It is summarized as follows:

The Court erred in admitting in evidence Gov-
ernment's Exhibit 207, which is a circular pertain-
ing to Century Investment Trust, bearing the fac-
simile signature of J. H. Shreve. There was no
proof that J. H. Shreve, or his co-defendant, mailed
it or caused it to be mailed. It was hearsay and in-
competent. It was received in the postoffice box of
Government's witness Manuel J. King. It was not
addressed to the witness, but was addressed to Man-
uel "K." King.

The exhibit, among other recitals, recites that
Century Investment Trust owns control, or has stock
ownership, in certain named corporations, without
differentiation. It further recites, contrary to the
indictment allegations, that Century Investment
Trust is a prosperous, healthy growing corporation,
and invited the addressee to join the company be-

(39)

fore the very early advance in price of the stock
(R. 943).

The exhibit is long, so it is paraphrased in the
Assignment of Error (R. 943). It is set forth in
full in the record (R. 724). It is a lulling invita-
tion to purchase stock of Century Investment Trust.
While Perkins identified the exhibit (R. 653), and
Government's witness Manuel J. King testified he
received it through the mails (R. 722), it is addressed
to Manuel ''K." King (R. 724). It is not mentioned
or displayed in the indictment. Defendant Archie C.
Shreve v^as refused the opportunity to testify that
defendants disavowed the exhibit, and that it be
suppressed as soon as it was discovered (R. 796,
797, 798). It bore the facsimile signature only of
J. H. Shreve (R. 727), and thus the imprint of that
signature was available to anyone who had access
to his genuine signature. There is not one word of
evidence in the record that either defendant was in
any manner connected with the exhibit, except it
bore the facsimile signature of J. H. Shreve. Its
harmful effect is exemplified by the incident that
counsel for the Government introduced it as the dra-
matic climax to their case in chief, during the testi-
mony of the last witness then called (R. 722, 727).

Aside from the fact the Court erred in refusing
to permit defendant Archie C. Shreve to explain
it (Assignment of Error VI, supra) error also fol-
lows the admission of the exhibit in evidence at all,
because the only evidence connecting defendants with
the exhibit is the testimony of Perkins identifying
the facsimile signature of J. H. Shreve (R. 653),
and the testimony of King that he received the ex-
hibit through the postoffice (R. 722).

Defendants objected to the receipt of the ex-

(40)

hibit in evidence because it was hearsay, and incom-
petent, predicated upon the reasons stated in the
objection (R. 723). No foundation whatever was
laid for the admission of the exhibit. It was error
to admit it, because in the absence of proof associat-
ing defendants with it, the facsimile imprint of the
signature of defendant J. H. Shreve upon it was not
enough. In Hartzell vs. U. S. (CCA8) 72 Fed. (2nd)
569, 578 it is said:

''Ordinarily, where a writing is not shown
to have been executed by the defendant, it cannot
be offered in evidence against him. To be ad-
missible in a criminal case, either to connect the
defendant with the commission of the crime, or
to procure a verdict against him, a writing must
be established with that degree of certainty rec-
ognized as necessary to a conviction. Sprinkle v.
United States (CCA4) 150 F. 56. A writing,
of course, does not prove itself, and there is no
presumption that a telegram is sent by the party
who purports to send it. McGoivan v. Armour
(CCA8) 248 F. 676; Drexel v. True (CCA8) 74
F. 12; Ford v. United States (CCA9) 10 F.
(2nd) 339. The Government was therefore bound
under the established rules of evidence to prove
that Hartzell was the person who sent these
messages. * * * *" (Italics supplied).
Bearing in mind the damaging import of the
whole exhibit, the erroneous admission of it at once
implies its harmful effect, and, when coupled with
the refusal of the trial Court to permit defendants
to explain their connection with it, leaves no room
to question the prejudicial effect of the error sug-
gested.

FIFTH: THE INDICTMENT ALLEGES THAT THE DE-
FENDANTS FALSELY PRETENDED AND REPRESENTED THAT
ALL MONEY DEPOSITED WITH THE SECURITY BUILDING

(41)

AND LOAN ASSOCIATION WOULD BE INVESTED IN SOUND
FIRST MORTGAGES ON IMPROVED REAL ESTATE CARE-
FULLY SELECTED, WHEREAS SUCH MORTGAGES WERE AT
ALL TIMES UNCOLLECTABLE AND PRACTICALLY WORTH-
LESS. THE TRIAL COURT ERRED IN ADMITTING IN EVI-
DENCE EXEMPLIFIED COPIES OF SUCH MORTGAGES, AND
ALSO EXEMPLIFIED COPIES OF DEEDS AND ASSIGNMENTS
RELATED THERETO, WITHOUT FIRST REQUIRING THE GOV-
ERNMENT TO ACCOUNT FOR THE FAILURE TO PRODUCE
THE ORIGINALS, OR IN ANYWISE LAY THE FOUNDATION
FOR ADMISSION OF SECONDARY EVIDENCE THEREOF.

ASSIGNMENTS OF ERROR
VIII

The Court erred in admitting in evidence Gov-
ernment's Exhibit 125, which was received in evi-
dence over the following objection and exception by
counsel for defendants:

"MR. HARDY: May it please your Honor,
we object to the introduction of Government's
Exhibit No. 125 for identification for the reason
that it appears to be an exemplified copy of a
warranty deed recorded in the office of the Re-
corder of Maricopa County, Arizona. Do I as-
sume, Mr. Peterson, that the exemplified copy
is offered under the provisions of the —

MR. PETERSON: Of the Federal Statute.

MR. HARDY: Of the Federal Statute?

MR. PETERSON: And the State.

MR. HARDY: The Code of 1928?

MR. PETERSON: And also the Federal
Statute.

MR. HARDY: We object, your Honor, for
the reason the Federal Statute has no applica-
tion to State records, and only applies to rec-
ords of the Federal Government, or the officers
of the Federal Government, and for the further
reason the exemplified copy is not admissible
under the provisions of the Arizona Code of 1928.

(42)

It would not be admissible under the rule in the
Federal Court under the statute which was ex-
isting in the Territory of Arizona at the time of
the admission of the Territory into statehood on
February 14th, 1912; that under the statues of
the Territory then existing there is no provision
for the introduction of an exemplified copy of
the records of a county recorder without proof
that the original record is not within the posses-
sion or control of the party offering the docu-
ment, and for that reason the exhibit is not the
best evidence. It is hearsay as to these defend-
ants; that only in the absence of a showing as
required by the law existing at the time of the
admission of the Territory into statehood, either
the original only could be introduced, or of proof
that the original is not in the control or possession
of the party offering it.

THE COURT: Overrule the objection.
MR. HARDY: Exception."
The full substance of said exhibit is as follows:
Exemplified copy of Warranty Deed dated Decem-
ber 20, 1930, executed by Arizona Holding Corpora-
tion by D. H. Shreve, President, R. F. Watt, Sec-
retary, to Jas. M. Shumway, conveying Lot 3 in
Block 2 of Goldman's Addition to the Town of Tempe,
recorded on map or plat thereof of record in the
office of the County Recorder of Maricopa County,
Arizona, in Book 1 of Maps at page 49 thereof;
acknowledged by D. H. Shreve and R. F. Watt as
President and Secretary respectively before E. F.
Young, Notary Public, December 20, 1930; filed and
recorded at request of Arizona Title Guaranty and
Trust Company May 12, 1931, W. H. Linville, Coun-
ty Recorder (R. 915).

(43)
IX
The Court eiTed in admitting in evidence Gov-
ernment's Exhibit 135, which was received in evi-
dence over the following objection and exception by
counsel for defendants:

"MR. HARDY: We object to the receipt in
evidence of Government's Exhibit 135 for identi-
fication for the same reasons that we objected
to the introduction of Government's Exhibit 125,
and for the further reason that the exhibit has
not been properly identified; no foundation has
been laid for its admission.

THE COURT: Overrule the objection.
MR. HARDY: Exception."
The full substance of said exhibit is as follows:
Exemplified copy Realty Mortgage executed Decem-
ber 30, 1930 by Lyda Dreyfus, mortgaging to Theo.
Castle the Southeast Quarter of the Northwest Quar-
ter of Section 3, Township 8 South, Range 18 West,
Gila and Salt River Base and Meridian; Lot 3 in
Section 3, Township 9 South, Range 18 West, Gila
and Salt River Base and Meridian; Lot 1 in Section
5, Township 9 South, Range 18 West, Gila and Salt
River Base and Meridian; all in Yuma County,
Arizona; secures five promissory notes of even date
calling for principal sum of $32,000, with interest
at the rate of 8V2% per annum, payable quarterly,
$2000 due on or before one year after date, $2000
on or before two years after date, $2000 on or be-
fore three years after date, $8000 on or before four
years after date, and $18,000 on or before five years
after date ; recorded at request of Security Title Com-
pany Jan. 5, 1931, A. K. Ketcherside, County Re-
corder by Lucy Frank, Dep. Rec; Assigned to Se-
curity Building and Loan Association Jan. 5, 1931,
see Book 4 Assignments page 351, A. K. Ketcher-

(44)

side, Co. Rec. Released by instrument dated Nov.

4, 1931 see Book 8 Releases page 359, A. K. Ketcher-
side, Co. Rec. by R. P. Leatherman, Dep. Rec. (R.
917).

X

The Court erred in admitting in evidence Govern-
ment's Exhibit 137, which was received in evidence
over the following objection and exception by counsel
for defendants:

"MR. HARDY: We make the same formal
objection, your Honor, to the introduction of Gov-
ernment's Exhibits 136 and 137 for identification,
for the same reasons we made to Government's
Exhibit No. 125.

THE COURT: The same ruling.
MR. HARDY: Exception."
The full substance of said exhibit is as follows:
Exemplified copy Assignment of Mortgage executed
by Theo Castle January 5, 1931, acknowledged same
date before Vivian Akerberg, Notary Public, San
Diego County, California, consideration $10.00; as-
signs to Security Building & Loan Association mort-
gage dated Dec. 30, 1930, executed by Lyda Dreyfus
to Theo Castle, which mortgage was recorded on Jan.

5, 1931 in Book 40 of Mortgages, page Blotter

No. 57, in the office of the County Recorder of Yuma
County, Arizona; recorded at request of Security B
& L Assn Jan. 15, 1931, A. K. Ketcherside, County
Recorder Yuma County (R. 918).

XI

The Court erred in admitting in evidence Gov-
ernment's Exhibit 142, which was received in evi-
dence over the following objection and exception by
counsel for defendants:

"MR. HARDY: We object to the receipt in

(45)

evidence of Government's Exhibit 142 for identi-
fication, for the same reasons that we objected to
the introduction in evidence of Government's Ex-
hibit 125.

THE COURT: Overruled.
MR. HARDY: And for the further reason,
your Honor, it does not appear on the face of this
document that it was signed at the request of
either of the defendants now on trial.
THE COURT: It may be received.
MR. HARDY: Exception."
The full substance of said exhibit is as follows:
Exemplified copy of Mortgage executed July 14, 1930,
by A. E. Rayburn, a widow, mortgaging to Arizona
Holding Corporation, consideration $8700.00, the
West Half of Northwest Quarter of Northwest Quar-
ter of Sec. 23, Tp. 1 N. R. 2 E. of the G. & S. R,
B. & M., and acknowledged on July 21, 1930, before
Roy C. Walters, Notary Public Maricopa County,
Arizona; filed and recorded at request of Arizona
Holding Corp. July 21, 1930, J. K. Ward, County
Recorder. Notation : For release of this mortgage see
Book 37 of Releases of Mortgage page 67; for assign-
ment of this mortgage see Book 17 Assignments of
Mortgages, page 115 (R. 919).

XII

The Court erred in admitting in evidence Govern-
ment's Exhibit 143, which was received in evidence
over the following objection and exception by counsel
for defendants:

"MR. HARDY: We object to the receipt in
• evidence of Government's Exhibit No. 143 for
identification, for all of the reasons for which
we objected to the receipt in evidence of Govern-
ment's Exhibit 125, and for the additional reason,

(46)

your Honor, because it appears upon the face of
an assignment of mortgage, that it was executed
by the Arizona Holding Corporation by D. H.
Shreve, President, and by R. F. Watt, Secretary,
and acknowledged before E. F. Young, a Notary
Public. There is nothing upon the face of this
document which discloses that either the defend-
ants had anything to do with it, and in addition
it appears that it is executed by D. H. Shreve,
as President of the Arizona Holding Corporation,
whereas D. H. Shreve is now deceased, and by
reason of that fact, any acts or declarations made
by the defendant, D. H. Shreve, during his life-
time, are not now admissible as against these
defendants; for the reason that neither of these
defendants now have the opportunity to examine
the said D. H. Shreve with respect to the purposes
or contents of this document, nor did they have
such opportunity at the previous trial of this
case, for the reason that the said D. H. Shreve
was alive and a defendant in that action, and not
subject to cross examination by any parties to
that action.

THE COURT: The objection is overruled.

MR. HARDY: Exception."

The full substance of said exhibit is as follows:
Exemplified copy of Assignment of Mortgage exe-
cuted July 21, 1930, by Arizona Holding Corporation
by D. H. Shreve President and R. F. Watt Secy, to
Security Building and Loan Association, considera-
tion $10.00, assigning to Security Building and Loan
Association mortgage bearing date July 14, 1930,
executed by A. E. Ray burn to Arizona Holding Cor-
poration, which mortgage was recorded on July 21,
1930 in Book 244 of Mortgages, records of Maricopa
County, Arizona, page 58, in the office of the County

(47)

Recorder of said county; acknowledged before E. F.
Young, Notary Public of Maricopa County, Arizona,
on same date, by D. H. Shreve and R. F. Watt, Presi-
dent and Secretary; filed at request of Security Bldg.
& Loan Assn. Jan. 2, 1931, W. H. Linville, County
Recorder of Maricopa County (R. 920).

The foregoing Assignments of Error VIII, IX, X,
XI, and XII relate to the admission in evidence of
exemplified copies of deeds, mortgages, and assign-
ments of mortgages as evidence on behalf of the Gov-
ernment. These assignments of error are selected
as examples of similar errors.'® The materiality
of these instruments to the criminal charges is mani-
fested by the fact that they were utilized by the
Government to prove indictment allegations that de-
fendants falsely pretended that all money deposited
with Security Building and Loan Association would
be invested "in sound first mortgages", whereas such
mortgages "would be and were at all times uncollect-
ible and practically worthless" (R. 5). Government's
Exhibit 125 (Assignment of Error VIII, supra) and
Government's Exhibit 128 (R. 475) are illustrative
of the whole situation. The comprehensive objection
to all these exhibits was directed to Exhibit 125 (R.
471, 472) and that objection, by reference, was made
to all remaining exhibits, (footnote 19).

19. For illustration: Mason deed (R. 482); Valentine mort-
gage (R. 485) ; Mason assignment of mortgage (R. 487) ; Valen-
tine deed (R. 488) ; Valentine deed (R. 489) ; Arrington mortgage
(R. 491); Dreyfus mortgage (R. 493); Castle assignment of mort-
gages (R. 494); Arrington deed (R. 497); Dreyfus deed (R. 502);
Arizona Holding Corporation deed (R. 512) ; Rayburn mortgage
(R. 520); Arizona Holding Corporation assignment of mortgage
(R. 515) ; Blackburn deed (R. 517) ; Arizona Holding Corporation
deed (R. 512); Rayburn mortgage (R. 513); Arizona Holding Cor-
poration mortgage (R. 518); York Mortgage (R. 562); York deed
(R. 565); McLaws deed (R. 566); and McLaws deed (R. 567). The
admission of these instruments is not assigned as error because
of the admonition against numerous assignments of error. We
refer to them for the purpose of enlarging the errors assigned.

(48)

Government's Exhibit 125 is an exemplified copy
of a warranty deed executed by Arizona Holding Cor-
poration, by D. H. Shreve, President, and R. F. Watt,
Secretary, and delivered to Jas. M. Shumway, con-
veying to Shumway property in the Town of Tempe,
Arizona (R. 471 to 473). Shumway in turn mort-
gaged this property to Security Building and Loan
Association for $11,800.00 (Exhibit 126, R. 473,
474). Shumway also delivered to Security Building
and Loan Association a note for $11,800 (Exhibit
127, R. 474) which was secured by the mortgage (Ex-
hibit 126, supra). With respect to these instruments,
Shumway, as a witness for the Government, testi-
fied:

''When I signed these instruments all these
typewritten places in Government's Exhibit 127
were in blank. I signed the note in blank and
when I signed Government's Exhibit 126 it was
in blank. I was not present when the mortgage
was acknowledged. At the time I signed Gov-
ernment's Exhibits 126 and 127, being a note
and mortgage, I did not know that any property
had been deeded to me. I am the James M.
Shumway mentioned in Government's Exhibit
125. At the time I signed the note and mortgage
in blank, I did not know this property had been
deeded to me." (R. 474, 475).
Shumway further testified:

"With reference to Government's Exhibit 127,
and to the inscription on that note "paid", I never
paid anything to recover that note. That word
was written on there after I received the note
back. I was not paid anything for deed back.
Government's Exhibit 128, being the deed from
me to the Arizona Holding Company. That deed
was given to me after the Building and Loan

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closed, when I went over one morning to check
in my business, the papers in Mesa, I called Dan
Shreve to the door by telephone from the Adams
Hotel, and asked him if the note and mortgage
had been used that he asked me to sign some time
before that. He said yes. I asked for how much
and he said $11,800, and it would be necessary
for me to deed back to the Building and Loan
some property at Tempe before I could get that
note and mortgage. I went over to the County
Recorder's office and looked it up and saw where
the property was located and went to Tempe and
looked at the property and came back and told
him I would sign this in order to get these papers
back, I did not get any money when I signed
the note and mortgage in blank. I never got any
money at all from this deal." (R. 476, 477).
Government's Exhibit 135 (Assignment of Error
IX, supra) in of like effect. This exhibit is an exem-
plified copy of a mortgage for $32,000 executed by
Lyda Dreyfus to Theo Castle (R. 493, 498). Castle
testified :

*'I did not personally loan $32,000 on any
property located in Arizona. I never loaned any
money on that property described in Government's
Exhibit 135. I presume I am the one named in
this assignment of mortgage from Theo Castle
to Security Building and Loan Association, being
Government's Exhibit 136 for identification." (R.
494).

With reference to Government's Exhibit 135, su-
pra, Lyda Dreyfus, the mortgagor, testified she did
not receive $32,000 for signing the mortgage (R.
499).

The loans evidenced by the foregoing transactions
were set up on the books of either Arizona Holding

(50)

Corporation, Security Building and Loan Association,
or Century Investment Trust, and they were there
audited by Government's witness Schroeder, who tes-
tified concerning them.^°

By referring to each of these exhibits, and the
objections made to their receipt in evidence, it will
appear that counsel for the Government made no
effort whatever to account for the originals (foot-
note 19, supra). Accordingly no foundation was
laid justifying the admission of secondary evidence
of these important instruments.

Defendants' objections to the admission of these
exhibits were comprehensive (R. 471, 472).^' Counsel
for the Government, during the objections, stated they
were admitted both under the Federal Statute and
Arizona Code of 1928 (R. 471, 472). There is no
applicable Federal Statute. ^^ The Revised Code of
Arizona of 1928, as we shall show, does not apply.

1. The admission uf copies of recorded instru-
ments in evidence in the United States District Court
for the District of Arizona is governed by the statutes
of Arizona existing at the time the Territory of
Arizona ivas admitted into' the Union.

Withaup vs. U. S. (CCA8) 127 Fed. 530.

Ding vs. U. S. (CCA9) 247 Fed. 12.

Neal vs. U. S. (CCA8) 1 Fed. (2nd) 637.

U. S. vs. Fay (D. C. Idaho) 19 Fed. (2nd) 620.

In the case of Withaup vs. U. S., supra, the court
had under consideration evidence relating to com-

20. He audited, and testified concerning, the following loans
referred to in these assignments of error: York loan (R. 658);
Dreyfus loan (R. 659); Rayburn loan (R. 661); Arrington loan
(R. 667); and Shumway loan (R. 669).

21. The same objection was made to each exhibit (R. 475,
482, 485, 488, 491, 493, 494, 497, 502, 512, 513, 515, 516, 518, 519, 520).

22. Sec. 661, Title 28, USCA, applies only to records of Fed-
eral executive departments. Sec. 688, Title 28, USCA applies only
to foreign records. These statutes are set forth in the Appendix,
page 8.

(51)

parison of handwritings. The admissibility of the
evidence resolved itself into the determination of
what law of Colorado applied, that is to say, whether
a statute adopted after the admission of Colorado
into the Union, which was in effect at the time the
case was tried, applied, or, whether the law, as it
existed prior to that state's admission, applied. Judge
Van Devanter, then speaking for the Circuit Court
of Appeals for the Eighth Circuit, after an analysis
of the law upon the subject, summarized it as fol-
lows :

"From what has been said, it follows that the
admissibility of the evidence under consideration
must be determined, not by the statute of Colo-
rado enacted in 1893, but by the common law,
which, by reason of the territorial act of 1861,
was the law of Colorado when it was admitted
into the Union as a state."

Subsequently, this Court, in Ding vs. U. S., supra,
(247 Fed. 12) considered the competency of a wit-
ness to testify in a Federal District Court sitting in
the state of Washington, who disavowed belief in a
Supreme Being. At the time the territory of Wash-
ington was admitted into the Union, a witness was
not disqualified to testify because of such disbelief.
This Court decided that the law of the territory, as
it existed when Washington was admitted into state-
hood, applied, and, citing Withaup vs. U. S., supra,
in approval, reversed the trial court. The opinion
states the rule as follows:

'We are of the opinion that the exclusion of
the offered witness was erroneous, in that the
court should not have determined the competency
of the witness by the rules of the common law
as in force in the respective original states of the
Union when the Judiciary Act of 1780 was pass-

(52)

ed, but should have applied the rules which gov-
erned the competency of witnesses and the ad-
missibility of evidence in force within the Terri-
tory of Washington when that territory was ad-
mitted to the Union. "^^

Having determined, therefore, that the law exist-
ing at the time Arizona was admitted into the Union
governed the admission of copies of these instruments
in evidence in the United States District Court in
Arizona, we next proceed to ascertain the state of
the law at that time.

Arizona was admitted into the Union on Febru-
ary 12, 1912, by the proclamation of President Taft
signed on that date.^"* The lower court, and this
court, take judicial notice of the proclamation. 23
C. J. p. 101, Sec. 1900.

The last territjorial legislative enactments govern-
ing the admission of the foregoing instruments in
evidence are found in the Revised Statutes of Arizona
of 1901. The applicable provisions are Sees. 2546 and
2548 of those 1901 statutes. ^^ They were amended
at the first session of the legislature after the terri-

23. The decisions on this question are collected in Neal vs
U. S., 1 Fed. (2nd) 637, cited supra.

24. The proclamation is set forth in the Appendix, page 10.
It is also found in Revised Code of Arizona, 1928, Preface Iv.

25. "Sec. 2546. Every instrument which is permitted or re-
quired by law to be recorded in the office of the county recorder
and which has been proved or acknowledged in the manner pro-
vided by laws in force at the time of its execution, may be read
in evidence without further proof; and the record of any such
instrument or a duly cetified copy of such record may also be
read in evidence with the like effect as the original, upon proof
of affidavit or otherwise, that the original is not in the posses-
sion or under the control of the party offering such record or
copy.

Sec. 2548. Certified copies under the hands and official seals,
if there be seals, of all territorial and county officers, of all notes,
bonds, mortgages, bills, accounts or other documents properly on
file with such officers, shall be received in evidence on an equal
footing with the originals in all suits now pending and which
may be hereafter instituted in this territory, where the originals
of such notes, bonds, mortgages, bills, accounts or other docu-
ments would be evidence."

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tory was admitted into the Union. ^® Sec. 1743 of the
Revised Statutes of 1913 omitted that part of Sec.
2546 of the Revised Statutes of 1901, which reads,
''upon proof of affidavit or otherwise, that the orig-
inal is not in the possession or the control of the
party offering such record or copy". But, as we
have seen, the 1901 statutes prevailed, and Sec. 2546
authorized the admission of copies of instruments
there affected only upon proof "that the original is
not in the possession or control of the party offering
it." Sec. 1743 of the Revised Code of 1913 is identi-
cal with Sec. 4456 of the Revised Code of 1928, and
Sec. 1745 of the Revised Code of 1913 is substanti-
ally the same as Sec. 4458 of the Revised Code of
1928, which latter section is copied at page 9 of
the Appendix.

It is true that Sec. 2548 (footnote 25) authorizes
certified copies of the documents there named, re-
corded with all county officers, to be received in evi-
dence on an equal footing with the originals, where
the originals would be evidence. But Sec. 2548, su-
pra, does not apply to the instruments here. The
governing statute is Sec. 2546 (footnote 25) since
it is a special statute limited to instruments recorded
in the office of county recorders only (as these were)

28. Revised Statutes of Arizona of 1913. The sections com-
parable with those of the 1901 statutes are:

"Sec. 1743. Every instrument which is permitted or required
by law to be recorded in the office of the county recorder and
which has been proved or acknowledged in the manner provided
by law in force at the time of its execution, may be read in
evidence without further proof; and the record of any such in-
strument or a duly certified copy of such record may also be
read in evidence with the like effect as the original.

Sec. 1745, Certified copies under the hands and official seals,
if there be seals, of all state and county officers, of all notes,
bonds, mortgages, bills, accounts or other documents properly on
file with such officers, shall be received in evidence on an equal
footing with the originals, in all suits now pending and which
may be hereafter instituted in this state, where the originals of
such notes, bonds, mortgages, bills, accounts or other documents
would be evidence."

(54)

in contradistincttion to Sec. 2548, supra, which is
a general statute applying to instruments recorded
in the offices of all county officers. This is a repi-
tition of an invariable rule of statutory construction.

59 C. J. p. 1056, Sec. 623.

Indian Fred vs. State, 36 Ariz. 48, 60, 282 Pac.
930, 935.

Since all these instruments were copies of rec-
ords of county recorders (footnote 19) then their ad-
missibility in evidence was governed by Sec. 2546 of
the Revised Statutes of 1901, which provide that
before they are admissible in evidence, the Govern-
ment was required to prove the originals were not
''in the possession or under the control of the party
offering" them.

However, assuming the statutes leave a doubt, the
question has been decided by the Supreme Court of
Arizona in the case of Mutual Benefit & Accident
Association vs. Neale, 43 Ariz. 532, 549, 33 Pac.
(2nd) 604, 611, by an interpretation placed upon
statutes of the same import as those invoked by the
Government. The court reviewed analagous statutes
through the Arizona Codes of 1887 to 1928. The
question decided is stated by the Supreme Court of
Arizona as follows:

"It is the contention of plaintiff that section
4454, supra, makes all records of all public offi-
cers admissible in evidence, whenever anything
which is stated therein as a fact may be material
in any case pending in any court, and such record
is prima facie evidence of the truth of the fact
therein stated, regardless of the nature of the
public record, or whether under the general rules
of evidence it would have been excluded."
Deciding the question, the court said:

(55)

"These two separate sections were carried on
substantially unchanged in the Civil Codes of
1901, pars. 2541, 2543, and 1913, pars. 1738-
1740. Upon examining them it will be found that
they refer to two distinct classes of records. Para-
graph 1871 covers the records of notaries public,
and certified copies of their records, as well as
declarations, protests, and acknowledgements giv-
en by them, are not merely admitted in evidence,
but are evidence of the facts stated therein, not
ocnclusively, of course, but at least sufficient to
make a prima facie case. On the other hand, the
copies of all other records are only admissible
when the records themselves would be admissible,
and nothing is said as to their effect. In other
words, the effect of paragraph 1869 was merely
to give a copy of the record the same effect as
the original, leaving the general question of the
admissibility and effect of the record to the gen-
eral rides of evidence sanctioned by the common
law J' (Italics supplied).

And the court continuino-:

''In view of the rule of the common law in
regard to the admissibility of judgments in evi-
dence, and the sound and indeed almost com-
pelling reason supporting that rule, and of the
revolutionary effect Avhich a literal interpreta-
tion of the statute would have upon the law of
evidence, we hold that under the consolidation
of the two sections it was not the intention of the
Legislature to abolish the general rules regard-
ing the admissibility of evidence, and the records
referred to in section 4454, supra, are still sub-
ject, so far as such admissibility is concerned, to
those rules, but that when, under those general
rules, they, or properly certified copies thereof,

(56)

are admitted, they are prima facie evidence of

the facts stated therein."

In Greenhcmm vs. U. S., 80 Fed. (2nd) 113, 126,
this Court considered the question of admitting sec-
ondary evidence of records of a Federal officer, which,
except for the distinction with respect to records
considered, is exactly similar to the question now
presented. In the Greenbaum case, Federal statutes
regulating the admission of copies of records in evi-
dence were construed, which, in effect, are like the
Arizona statutes. In rejecting secondary evidence,
this Court states reasons therefor, which the Supreme
Court of Arizona could have adopted in the case
cited without affecting the logic of the conclusion
of that Court. In the Greenbaum case this Court
said (p. 126) :

"An equally serious error committed in the

receiption of these cards was the inexplicable

violation of the best evidence rule."

3|t 3p 3|C 3(C

28 USCA, Sec. 661 provides:

''Copies of any books, records, papers, or oth-
er documents in any of the executive depart-
ments * * * shall be admitted in evidence equally
with the originals thereof, when duly authenti-
cated under the seal of such department."

"The government seeks to avoid the effect of
this mass of authority by the assertion that the
cards offered in evidence were 'public records,'
and that hence, in some manner, any and every
violation of the law of evidence committed in their
introduction magically vanishes.

There can be no doubt that official records
kept by persons in public office, which records
are required to be kept either by statute or by

(57)

the nature of the office, are admissible to prove
transactions occurring in the course of official
duties, within the personal observation of the
official recording the transactions, without any-
further guarantee of their accuracy. (Citing au-
thorities).

Assuming that the cards introduced in evi-
dence in this case were public records within the
meaning of the above cases, that conclusion does
not cure the violation of the hearsay and best evi-
dence rule discussed above. Giving them the full
import of the public record rule is merely to con-
clude that the figures on the card were accurately
transcribed from the income tax return in Wash-
ington. It throws no light on who signed the
original return, hence makes the original return
no less inadmissible hearsay. The public nature
of these cards may vitiate hearsay in the tran-
scription, but it cannot vitiate hearsay in what
is transcribed. The fact that a record is public
adds nothing to what is recorded. * * *" (Citing
authorities).

Thus, the instruments here involved were not
admissible simply because they bear the exemplifica-
tion of county recorders with whom they were re-
corded. They are copies of purported originals, and
hence, in addition to the limitation of the statutes
themselves, are further circumscribed by "the gen-
eral rules of evidence sanctioned by the common law,"
as stated by the Supreme Court of Arizona in MuUml
Benefit Health & Accident Ass^n vs. Neale, supra,
and as applied by this Court in Greenbaum vs. U. S.,
supra. "The general rules of evidence sanctioned by
the common law," of course, mean that the best evi-
dence available must be produced, if accessible, and
if not, then the next best evidence will be admitted

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(22 C. J. p. 974, Sec. 1220) but then only upon a
showing that the original evidence is not available.
22 C. J. p. 1045, Sec. 1342.

Thus, the statutes cited, in themselves, point out
the error asserted, but had they not, the interpre-
tation placed upon comparable statutes by this Court,
and by the Supreme Court of Arizona, does point
out the error.

2. This Court is noiv bound to follow the statutes
of the State of Arizona, and interpretations placed,
upon such statutes by the Supreme Court of Arizona.
In view of Withaup vs. U. S. and Ding vs. U. S.,
above cited, probably more should not be said with
respect to the law which should have been followed
by the trial court in admitting copies of these docu-
ments in evidence. Had doubt existed, the question
is now set at rest by the Supreme Court in the epochal
case of Erie Railroad Company vs. Tompkins, 82
L. Ed. (Advance Opinions p. 787), 58 Sup. Ct. Rep.
817, decided April 25, 1938. The Supreme Court
there held that, since there is no federal common
law, the law to be applied by Federal Courts in any
case, except in matters governed by the Federal Con-
stitution, or by Acts of Congress, is the law of the
State, and whether that law is declared by statute,
or by decision of its highest court, is not a matter
of Federal concern. In so deciding, the Supreme
Court disapproved the doctrine of Sivift vs. Tyson,
rendered almost a century before in 16 Peters 1,
10 L. Ed. 865. The prevailing rule as announced
in Erie vs. Tompkins, is as follows:

"Except in matters governed by the Federal
Constitution or by Acts of Congress, the law to
be applied in any case is the law of the State.
And whether the law of the State shall be de-
clared by its Legislature in a statute or by its

(59)

highest court in a decision is not a matter of
federal concern. There is no federal general com-
mon law."

Thus, there is no alternative affording escape
from the error of the trial court in admitting coj>-
ies of these documents in evidence without account-
ing for the originals. The voluminous and prejudi-
cial testimony relating to them, and founded upon
them was inadmissible, because the foundation for
such testimony was the incompetent documents con-
cerning which the testimony pertained.

SIXTH: THE GOVERNMENT'S WITNESS WATT TESTIFI-
ED HE RE-WROTE THE BOOKS OF CENTURY INVESTMENT
TRUST AND ARIZONA HOLDING CORPORATION AT THE DI-
RECTION OF THE DECEASED DEFENDANT, DANIEL H. SHREVE,
FROM RECORDS NOT MADE BY HIM, AND FROM INFORMA-
TION OBTAINED BY HIM FROM WHATEVER SOURCES AVAIL-
ABLE. HE ALSO TESTIFIED MANY ENTRIES IN THESE BOOKS
ARE REFLECTED INTO THE BOOKS OF SECURITY BUILDING
AND LOAN ASSOCIATION. THE TRIAL COURT ERRED IN
ADMITTING THESE BOOKS IN EVIDENCE, SINCE THEY WERE
NOT ORIGINAL ENTRIES OF THE TRANSACTIONS THERE RE-
CORDED, ARE NOT THE BEST EVIDENCE, AND ARE HEARSAY.

ASSIGNMENT OF ERROR

XVIII

The Court erred in admitting in evidence Gov-
ernment's Exhibit 61, which was received in evidence
over the following objection and exception by counsel
for defendants:

''MR. HARDY: We object, your Honor, to
the introduction of Government's Exhibits Nos.
61 to 70, inclusive, for identification, for the
reason that no proper foundation has been laid
for the admission of these books, and for the
additional reason that the books are hearsay, and
that they are not the best evidence of all or of
many of the transactions appearing in such books.
For the further reason that the entries therein

(60;

are not the primary or original entries, because
it now appears from this testimony of Mr. Watt,
who is a witness for the Government, that these
books were rewritten from information, data, and
from books or records, and from information
which came into his possession or under his ob-
servation after he became employed by the Cen-
tury Investment Trust or the Arizona Holding-
Corporation, and that such data and books and
records were not prepared by him, and, there-
fore, these books as a result are a transcription
of entries, memoranda or records which were
made by other persons. For the further reason
that it appears from the indictment herein that
the last letter appearing in such indictment is
October 24th, 1931, and that the testimony of the
witness Watt is, that many of the entries in
these books and records were made and reflected
transactions after that date. We further object
to the admission of these exhibits marked for
identification, for the reason that they are in-
competent, irrelevant and immaterial, and for the
further reason that there (it) has not been shown
by the Government that either of the defendants
herein made any of such entries, dictated the
making of any such entries, or that they knew
that any of such entries were made in such books,
and in such exhibits."

The full substance of said exhibit is as follows:
General Ledger of Century Investment Trust, under
one binder, subdivided and marked: Assets, Liabili-
ties, Revenues and Expenses. First entry under As-
sets November 30, 1931, account No. Ill, Notes
Receivable; Account No. 112, Accounts Receivable;
Account No. 114, Insurance Accounts Receivable; Ac-
count No. 116, Accrued Interest Receivable. First

(61)

entry under Liabilities October 30, 1929, Account
No. 200 authorized capital stock Preferred; Account
No. 200-A, unissued capital stock Preferred; Account
No. 201, authorized capital stock Common; Account
No. 201-A, unissued capital stock Common; Account
No. 202, authorized capital stock Series A Preferred;
Account No. 202-A, unissued capital stock Series A
Preferred; Account No. 203, capital account Pre-
ferred; Account No. 204, capital account Common;
Account No. 205, capital account Series A Preferred;
Account No. 206, Capital Surplus; Account No. 207,
earned surplus; Account No. 208, Reserves; Account
No. 209, Contingent Fund; Account No. 212, Re-
serve for Premiums; Account No. 220, Notes and
Mortgages Payable; Account No. 223, Contingent
Commission Account; Account No. 225, Profit and
Loss; First entry under Revenues, October 23, 1931,
Account No, 300, interest earned; Account No. 304,
stock and bond sales; Account No. 305, cost of stock
and bond sales; Account No. 306, Real Estate sales;
Account No. 307, cost of real estate sales; Account
No. 308, insurance commissions earned ; Account No.
315, rentals; Account No. 325, miscellaneous earn-
ings; First entry under Expenses November 30, 1930,
Account No. 400, General Expense; Account No.
401; Insurance Department Expense; Account No.
402, Property expense; Account No. 411, Commis-
sions paid on sale of capital stock; Account No. 415,
commissions paid (R. 928).

XIX

The Court erred in admitting in evidence Gov-
ernment's Exhibit 70, for all the reasons urged in
Assignment of Error XVIII. The full substance of
said exhibit is as follows: Stockholders' Ledger Ari-
zona Holding Corporation, subdivided: Real Estate,

(62)

Stocks and Bonds, Notes Receivable, Accounts Re-
ceivable, Notes Payable, Accounts Payable, Real Es-
tate; first entry dated 6-12-31, including West half
Lots 6 and 7, Blk. 16, Mesa; Lots 5 and 6, Blk.
231 of Tucson, with notation "This property came
from Mary Robson for stock of Century Investment
Trust." Stocks and Bonds: showing various stock
transactions with Century Investment Trust, entitled
''Insurance Securities Corporation". Notes Receiv-
able includes 0. H. and Mary Robson dated 1-23-30
for $1500.00, due 4-23-30, security 740 shares pre-
ferred stock Century Investment Trust and 400
shares common stock Century Investment Trust. Ac-
counts Receivable includes items Citizens State Bank,
John C. Hobbs, Mesa Agency, Glen 0. Perkins, W.
H. Perry, 0. H. Robson, Security Building and Loan
Association. Notes Payable includes items of Cen-
tury Investment Trust note dated 12-16-21, amount
$250,000.00, payable 12-16-36; also note Century
Investment Trust dated 5-16-32, amount $12,800.00,
due 12-31-33; also Mary Robson note, payable 11-1-
30, secured by 80 shares preferred and 80 shares
common and 80 shares Series A preferred stock Cen-
tury Investment Trust; also James M. Shumway note
dated 2-23-32, amount $550.00, dated 2-23-37. Ac-
counts Payable, containing miscellaneous accounts
with Arizona National Bank, Century Investment
Trust, D. H. Shreve and R. F. Watt (R. 931).

XX

Under Sub. (d) of Rule 24, this Assignment of
Error is copied in full in the Appendix at page 12.
It is summarized as follows:

It relates to the admission in evidence of Gov-
ernment's Exhibit 71, which is the general ledger
of Security Building and Loan Association. The re-

(63)

ceipt of this exhibit in evidence was objected to for
the reason that the book, embraced by the exhibit,
is not a record of the original entries, but are tran-
scribed entries; because it is hearsay and not the
best evidence; and because it is not shown that these
defendants directed or caused any of the entries in
these books to be made (R. 932).

The exhibits embraced by these Assignments of
Error are books of accounts of either Arizona. Hold-
ing Corporation, Century Investment Trust or Se-
curity Building and Loan Association. They are
voluminous and unwieldly, consequently by order of
the trial court (R. 901, 902) they, and the remain-
ing books of accounts of these corporations, have
been transmitted to the Clerk of this Court pursu-
ant to Sub. (4) of Rule 14.^^

Exhibit 61 (Assignment of Error XVIII, supra)
is the general ledger of Century Investment Trust
(R. 355). Exhibit 70 (Assignment of Error XIX,
supra) is the stockholders' ledger of Arizona Hold-
ing Corporation (R. 368). Exhibit 71 (Assignment
of Error XX, supra) is the general ledger of Se-
curity Building and Loan Association (R. 412).
Government's witness Schroeder, an auditor who
testified as a witness for the Government, partly
utilized the books of Arizona Holding Corporation
and Security Building and Loan Association to pre-
pare his audit and from which he gave testimony
(R. 654, 655). Government's witness Fierstone, an
auditor who also testified on behalf of the Govern-

27. These Exhibits are numbered 61 to 78, inclusive (exclud-
ing Exhibit 76). They are all books of accounts of either Arizona
Holding Corporation, Century Investment Trust or Security Build-
ing and Loan Association. The admission of Exhibits 61, 70 and
71 are selected under the foregoing Assignments of Error as
typical of all of them.

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ment, prepared his audit from the books of Century
Investment Trust (R. 688, 689).

On the former appeal this Court, in addressing
itself to the admissibility of these books, said:

"As to the books of the corporations named
in the indictment, which corporations it is alleged
were mere instrumentalities of the defendants
in the perpetuation of the fraudulent scheme, it
is clear that these books were admissible with-
out further proof than the connection of the de-
fendants with the organization and control of
these corporations. * * * Shreve vs. U. S., 77
Fed. (2nd) 2, 7.

We appreciate the import of the foregoing rule,
but we cannot conclude it is inflexible. We thnik
we are justified in saying that the rule, if literally
applied to this record, goes farther than any here-
tofore announced by this Court. ^^ We believe this
Court, upon re-examination of the rule in its appli-
cation to the present record, will conclude that, not-
withstanding the sweep of the rule, it does have a
limitation beyond which there may be error.

The testimony of Government's witness Watt, in
connection with the exhibits embraced by these As-
signments of Error, is sufficiently important to
justify that it be set out in the bill of exceptions,
for the most part, by questions and answers (R. 344
to 352). Since the testimony comprises several pages,
we have transcribed it in the Appendix beginning
at page 19.

28. Cf. CuUen vs. U. S. (CCA9) 2 Fed. (2nd) 524, 525, where
it is said: "The defendants Cullen and Dennison were the cor-
poration. They owned the stock and had entire control and own-
ership of the corporate property." In that situation corporate books
were admitted without proof that Cullen and Dennison authoriz-
ed the entries or had knowledge of them. That, undoubtedly. Is
a correct conclusion, but the record here does not disclose a
parallel situation.

(65)

In connection with the testimony of Government's
witness Watt, it is important to consider that the
record does not disclose that these defendants super-
vised or dictated the making of a single entry in the
books of either Century Investment Trust, Arizona
Holding Corporation or Security Building and Loan
Association. It is manifest from the testimony of
Watt, that many entries in the books were made upon
his own responsibility. It is not an exaggeration to
say that they were his books. He testified he re-
wrote the general ledger (Exhibit 61) of Century
Investment Trust (R. 344) and brought to date books
of Arizona Holding Corporation (R. 347, 348) and
that entries from those books were reflected into the
books of either Century Investment Trust or Security
Building and Loan Association (R. 347, 348, 349).
A significant part of his testimony is that Govern-
ment's Exhibit 61 (Assignment of Error XVIII, su-
pra) which is the general ledger of Century Invest-
ment Trust, was rewritten by him at the direction of
Daniel H. Shreve, a deceased defendant (R. 344, 345).
With respect to that important book, therefore, these
defendants should not be held accountable, and it is
an important book, because it was not only a general
ledger, but it was also the book principally utilized
by Government's witness Fierstone in the prepara-
tion of his audit (R. 691, 692). Furthermore, Watt
testified that neither of these defendants ever re-
quested him to rewrite these books, nor counseled
with him in the rewritting of them (R. 347). Watt
testified that he rewrote the books of Century Invest-
ment Trust ''from whatever information I could get
the necessary information from — from whatever
source, I should say." (R. 344). Again he testified,
*To a great extent I relied upon information I found
myself in order to rewrite these books." (R. 345).

(66)

Again, "I did not rewrite any books of the Security
Building and Loan Association, except trace entries
in the Building and Loan books which pertained to
the Century Investment Trust or Arizona Holding
Corporation. I traced them from the rewHtten books
of the Century Investment Trust." (R. 347). Again,
'There had been no entries made in the books of
Arizona Holding Corporation since November 4th
or 5th, 1929. / opened a set of books and brought
them up to date." (R. 347, 348).

In view of the former opinion, more cannot be
said to point out the error in admitting these books
in evidence. We think we are justified in saying that
the rule announced by this Court upon the former
appeal, in connection with the admission of these
books, was not intended to apply a situation such
as now appears from this record.

It follows from the error in admitting in evi-
dence the foregoing books of account of Century
Investment Trust, Arizona Holding Corporation and
Security Building and Loan Association, that the tes-
timony of Government's witnesses Fierstone, based
upon his audit of those books, was erroneous, as will
appear from the next Assignment of Error.

SEVENTH: THE TRIAL COURT ERRED IN PERMITTING
GOVERNMENT'S WITNESS FIERSTONE TO TESTIFY WITH RE-
SPECT TO AN AUDIT MADE BY HIM OF BOOKS OF CENTURY
INVESTMENT TRUST, FOR THE REASON SAID BOOKS WERE
NOT ADMISSIBLE IN EVIDENCE, AS SHOWN BY THE TESTI-
MONY OF GOVERNMENT'S WITNESS WATT RELATING TO
THESE BOOKS. THE TESTIMONY OF THE WITNESS FIER-
STONE CONCERNING THIS AUDIT WAS THEREFORE BASED
UPON BOOKS WHICH DID NOT CONTAIN THE ORIGINAL EN-
TRIES OF THE TRANSACTIONS THERE RECORDED; IT WAS
NOT THE BEST EVIDENCE, AND WAS HEARSAY.

(67)

ASSIGNMENT OF ERROR
XXIII

The Court erred in permitting Government's wit-
ness Fierstone to testify from, and in regard to, a
summary which he made from books and records of
Century Investment Trust, which testimony was ad-
mitted over the following objection and exception
by counsel for defendants:

"MR. HARDY: Your Honor, we now object
to the witness giving any testimony based upon
an audit of the books of the Century Investment
Trust for the reason that it has been testified
by a witness for the Government, Mr. Watt, that
these books, in their entirety, were rewritten by
him, and therefore, they are not the original or
first permanent entries of the books of the Cen-
tury Investment Trust, and the Government's wit-
ness, Watt, further testified that the records and
data and memorandum from which the books
were re-written, were filed with other books,
records and memorandum of the Century Invest-
ment Trust; and for the further reason that it
has not been shown by the Government thus far
that these defendants, or either of them, caused
the books of the Century Investment Trust to
be re-v/ritten, or that they knew that they were
re-written, or that they acquiesced in their re-
writing them; therefore, generally, the books are
hearsay, incompetent, irrelevant and not the best
evidence as to the defendants on trial.
THE COURT: Overruled.
MR. HARDY: Exception." (R. 941).

The witness Fierstone was an auditor employed
by the Federal Bureau of Investigation (R. 688). He
made an audit of the books of the Century Invest-

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ment Trust, and testified therefrom as a witness for
the Government (R. 694).

The books and records of Century Investment
Trust were not admissible in evidence, as has been
shown by Assignments of Error XVIII, XIX and
XX. Since these books and records of Century In-
vestment Trust were not admissible in evidence as
against these defendants, an extended discussion of
the admissibility of testimony of Government's wit-
ness Fierstone, based on the audit thereof, is un-
necessary, because the error follows as a natural
sequence.

EIGHTH: THE COURT ERRED IN ADMITTING IN EVI-
DENCE RECORDS OF THE FIRST NATIONAL BANK OF PRES-
COTT, ARIZONA. THE FIRST NATIONAL BANK OF PRESCOTT
IS NOT MENTIONED IN THE INTICTMENT, NOR IN THE BILL
OF PARTICULARS. EVIDENCE ON BEHALF OF THE GOVERN-
MENT DISCLOSED THAT THESE RECORDS WERE NOT IDEN-
TIFIED BY THE PERSONS WHO MADE THEM. ACCORDINGLY
NO PROPER FOUNDATION WAS LAID FOR THE ADI\nSSION
OF THESE RECORDS IN EVIDENCE; THEY ARE NOT THE BEST
EVIDENCE; AND ARE HEARSAY. THEY WERE NOT ADMISSI-
BLE UNDER THE ACT OF CONGRESS OF JUNE 20, 1936 (SEC.
695, TITLE 28, USCA) BECAUSE THAT ACT, IF APPLIED TO
THIS CASE, IS VOID IN THAT IT OFFENDS THE FEDERAL
CONSTITUTION BY NOT REQUIRING THAT DEFENDANTS BE
CONFRONTED WITH THE WITNESSES AGAINST THEM; IT IS
EX POST FACTO, BECAUSE THE INDICTMENT WAS RETURN-
ED BEFORE THE ACT BECAME EFFECTIVE; AND IT DEPRIVES
DEFENDANTS OF DUE PROCESS OF LAW.

ASSIGNMENT OF ERROR

XIII

The Court erred in admitting in evidence Gov-
ernment's Exhibit 84, which was received in evidence
over the following objection and exception by counsel
for defendants:

'*MR. HARDY: Your Honor, we object to
the introduction of this exhibit, for the reason
that it is apparent therefrom that some of the
items on the pages offered would not be admis-

(69)

sible against the defendants in this case, and for
the reason no proper foundation has been laid for
the admission of the offered exhibit, and for the
second reason, it appears from the witness him-
self that they are not the first or original or
primary documents or information from which
the entries are made. The witness himself has
said they are transcribed entries.

THE COURT: It may be received.

MR. HARDY: Exception."
The full substance of said exhibit is as follows:
A transcription of the general ledger of the First
National Bank of Prescott, as follows:

FRIDAY

RESOURCES Nov. 8, 1929

Loans & Discounts $315,355.34

U. S. Gov't Securities 149,880.71

Other Bonds, Stocks, etc 60,342.70

Leasehold Improvements __ 3,677.36

Furniture & Fixtures 3,314.86

Interest Paid 2,235.48

Expense General 9,555.32

Suspense 134.44

Stationery and Supplies 2,405.93

Federal Res. Bank, L.A 28,197.27

Chase Natl. Bank, N.Y 21,369.58

Western Nat. Bank, L.A.__ 9,012.30
Boatmens Nat'l Bank,

St. Louis 8,970.36

Pacific Nat. Bank, S.F 3,662.36

1st Nat. Bk. Ariz., Phoenix. 831.06

Com'l Nat. Bk. Phoenix 8,471.00

El Paso N/B, El Paso 1,673.89

Transit— Cash Col's 1,186.13

Exchange Maturing 20,000.00

Over & Short 29.90

(70)

Cash on Hand 20,715.21

Gold Bullion 781.40

$678,163.34
LIABILITIES

Capital Stock $100,000.00

Surplus 25,000.00

Undivided Profits 6,554.04 (red)

Interest Received 9,816.22

Exchang-e 157.55

Safe Dep. Rentals 134.00

Escrow Fees 28.00

Other Earnings 6.75

Certified Checks

Cashiers Checks 8,549.39

Cashiers Vouchers

Demand Deposits, Com'L__ 288,765.23

Demand Certified Dep

Time Deposit Savings 125,448.61

Time Cert— Dep. 18,220.00

Time Pub. Funds 75,000.00

Postal Savings 27,037.59

$678,163.34 (R. 922).
XIV

The Court erred in admitting in evidence Item
4 of Government's Exhibit 90, which was received
in evidence over the following objection and excep-
tion by counsel for defendants:

'^MR. HARDY: We object to its admission,
upon the grounds it has not been properly identi-
fied, no foundation has been as yet laid by this
witness, or any other witness, for its admission,
and for the further reason that it is not the first
permanent entry of the transaction, and it is
hearsay as to these defendants.

(71)

THE COURT : It may be received.

MR. HARDY: Exception."
The full substance of Item 4 of said exhibit is as
follows: Record — letter of First National Bank of
Prescott, dated March 8, 1929, addressed to First
National Bank of Phoenix, Arizona, enclosing col-
lections and credit items, which includes an item
dated March 7, 1929, No. 38, Maker Arizona Holding
Corporation, payor, 91-11, amount $20,000; last en-
dorser Us. (R. 924).

XV

The Court erred in admitting in evidence parts of
Government's Exhibits 92, 93 and 94, which were
received collectively in evidence over the following
objection and exception by counsel for defendants:

"MR. FLYNN : We offer in evidence, if the
Court please, the parts of Government's Exhibits
92, 93 and 94, which the witness has identified,
and in order to keep the record straight as to the
part of the exhibits which is going into the rec-
ord, we ask leave to read them into the record.
We are also offering the printed heading which
shows what the entries are in regard to.

MR. HARDY: (On voir dire examination of
the witness) Mr. Evans, did you testify that
these entries were made in your own handwrit-
ing, the ones referred to by Mr. Flynn?

A. Yes, the entries on the first line under
date of March 7th, over to that column including
the amount.

Q. Are those the first permanent entries on

that transaction, or are they reflected from
other records or memoranda of the Bank?

A. That is only an auxiliary record or mem-
orandum record.

(72)

Q. Well, is it the first record of the trans-
action?

A. It is not.

Q. It is a secondary record?
A. A secondary record.
MR. HARDY : We object to the introduction
of the portions of the exhibits referred to by Mr.
Flynn, for the reason that it appears they are
not the first record of the transaction; for the
second reason that no proper foundation has been
laid for the admission; that they are hearsay as
to these defendants, and that from the exhibits
themselves, they appear to be records referring
to transactions between the Bank and Joseph E.
Shreve, J. G. Cash, and Glen 0. Perkins.
THE COURT: They may be received.
MR. HARDY: Exception."
The full substance of said Exhibits 92, 93 and 94
are as follows:

(Exhibit 92) : The heading Maker: Shreve, Joseph
E., Care of Southwest Union Securities Coi-poration,
San Diego, California, under the date March 7th,
1929; Security or endorser, 3-7-29, endorsed Jesse
H. Shreve, Certificate 100, Sunset B. and L. Asso-
ciation, San Diego, $12,500.00; per cent, 7; Number,
127; Amount, $10,000.00.

(Exhibit 93) : Maker: Glen 0. Perkins, 101 Scott
Street, Tucson, Arizona, under date of March 7th,
1929; Security or endorser, 3-7-29, 200 Security G.
and L., Tucson, endorser, J. H. Shreve; per cent, 7;
Number, 128; Amount $10,000.

(Exhibit 94): Maker: Cash, J. G., address 101
Scott Street, Tucson; Date, March 7th, 1929; Se-
curity or endorser, 100 Security B. and L. Associa-
tion, Tucson; Endorser, J. H. Shreve (R. 924).

(73)

XVI

That if the exhibits referred to in Assignments
of Error XIII, XIV and XV were admitted in evi-
dence under the authority of Section 695, Title 28,
USCA, then the Court erred because ( 1 ) the offenses
charged in the indictment are alleged to have been
committed before the enactment of said Act; (2)
that by the express terms of said Act it is pros-
pective only, and therefore said Act did not, and
could not, apply to the trial of this case; (3) that
if said Act is construed to apply to the trial of this
case, notwithstanding the objections raised in sub-
divisions 1 and 2, supra, then said Act is unconsti-
tutional and void as to these defendants, because (a)
it dispenses with the necessity of confronting de-
fendants with the witnesses against them in violation
of the Sixth Amendment of the United States Con-
stitution; (b) it alters the legal rules of evidence
and requires less or different testimony to convict
defendants than the law required at the time of the
commission of the alleged offenses, and thus the Act
is ex post facto in violation of Section 9, Article 1,
of the Constitution of the United States; (c) it de-
Drives defendants of their liberty without due pro-
cess of law in violation of the Fifth Amendment to
the Constitution of the United States (R. 926).

1. Records of First National Bank of Preseott were
admitted in evidence as a part of the case of the Govern-
ment. Admission of these records in evidence was error be-
cause no foundation was laid for their admission; they were
not original entries; and were hearsay.

The foregoing Assignments of Error relate to
transactions reflected by books and records of the
First National Bank of Preseott. The Government
sought to prove these transactions by the witnesses
Trott, Evans and Faulkner. Trott was a teller R.

(74)

294). Faulkner was also a teller and assistant cash-
ier (R. 333). Evans was the cashier and director of
that bank (R. 303). Evans was indicted for the
same offenses for which these defendants were con-
victed, and he was convicted upon the first trial of
the case (R. 181). Before the retrial of the case,
the indictment was dismissed as to Evans (R. 181)
and he testified for the Government on the retrial
(R. 303).

The foregoing Assignment of Errors are selected
as examples of errors which relate to the omission
in evidence of many records of the First National
Bank of Prescott (R. 294 to 343). The First Na-
tional Bank of Prescott is not named in the indict-
ment (R. 1 to 38) and it is not mentioned in the
Bill of Particulars (R. 60 to 81).

The records received in evidence related to a loan
of $30,000 made by the First National Bank of Pres-
cott, which apparently was obtained upon three sep-
arate notes for $10,000, each signed, respectively, by
Joseph G. Shreve (not the defendant Jesse H. Shreve,
R. 311) by Glen 0. Perkins and J. G. Cash. (Gov-
ernment exhibits 92, 93, 94, R. 313 and 314). The
notes themselves were not offered or received in
evidence. There were introduced in evidence auxili-
ary or memorandum bank records only of this loan,
embraced by Exhibit 84 (R. 298 to 302) Exhibits
92, 93, and 94 (R. 313, 314) and item 4 of exhibit
90 (R. 309).

These exhibits are embraced by the foregoing
Assignments of Error XIII, XIV, and XV. Defend-
ants objected to the receipt of these exhibits in evi-
dence because no foundation had been laid for their
admission; because they were not the original en-
tries; and were hearsay (R. 300, 309, 312, 313).

Exhibit 84, and Item 4 of Exhibit 90, both of

Beginning with the word '•but'* In
line 2S, page 75, and ending with the word
•endoreer* In line 24, substitute the
followlngj

but no one actually testified the def-
endant Jesse H. Shrere actually signed
the original notes as endorser. The
witness Evans testified that V.H.Shreve
which Is entered here (referring to the
bank memoranda of the original notes.
I.e. Exhibits 92, 93 and 94) as endorser
of the notes Is the defendant Jesse H.
Shreve*** (R. 314)

(75)

which are related to Exhibits 92, 93 and 94, were
inadmissible for the reason stated in the foregoing
Assignment of Error XIII and XIV, and for the
reasons stated in the objection made to them, as
pointed out above (R. 300, 309, 312, 313).

By its decision on the former appeal, this Court
said:

'The record contains many other assignments
of error relating to the admissibility of books of
corporations other than those named in the in-
dictment. With reference to these rulings, it
will be sufficient to say that in order to make
them competent as against the defendants ' it is
essential to show that the defendants made such
entries or caused them to be made or assented
thereto."

Shreve vs. U. S., 77 Fed. (2nd) 2, 7.

The records of these loans admitted in evidence
over the objection of defendants, as above pointed
out, disclose that the endorser upon the notes evi-
dencing the loans to which they relate, apparently
was J. H. Shreve, but no on« testified that-he-^is-the
--defendant -~Je9se™-Hr-Shreve in this €ase-,-~oi*-^hat-4ie
aetually— signed the notes as endorser. The notes
evidencing the loan were not offered or received in
evidence, nor were they accounted for. Hence, we
have the admission of secondary evidence to associ-
ate the defendant Jesse H. Shreve with these import-
ant transactions. The defendant, Archie C. Shreve,
was not in any manner associated with the trans-
actions, either by testimony or records.

With reference to Government's Exhibit 84, Gov-
ernment's witness Trott testified as follows:

"I made all the items on this page of the
exhibit. They were transcriptions of the general

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ledger entries covering that day's business, No-
vember 8th. This page on this exhibit does not
contain the first and original entry of the trans-
action. The original entries are in the general
ledger. This is a transcription of the day's busi-
ness. It is a transcription of the general ledger,
the items transferred from the general ledger to
the daily statement, in order to get a picture of
the day's business of the bank condensed. Neith-
er J. H. Shreve nor A. C. Shreve supervised or
requested me, or required me to make any of the
entries on this page of the exhibit. I don't re-
member v^^hether they had any connection v^ith the
First National Bank of Prescott at that time or
not. There was no connection with them on my
making these entries at that time. It was a part
of my duty at the bank on that particular day.
I cannot remember that J. H. Shreve and A. C.
Shreve were officers or directors of the First
National Bank in Prescott at that time." (R.
299, 300).

With reference to Item 4 of Government's Ex-
hibit 90, Government's witness Evans testified as
follows :

"The payment for the certificates of deposit
was delivered to me by Mr. Brewer. There was
a check for $20,000 and some notes accepted sub-
ject to the approval of the Board of Directors
of the Bank. I know that Government's Exhibit
90 for identification was the form of record that
was used by the bank in its collection of items.
I have some recollection in regard to the fourth
item. That entry is a correct record of the trans-
action which it purports to record (R. 308).

I did not make the entry referred to in this
exhibit. It is not the first original entry of the

(77)

transaction. As I stated, it is only the record
of items. I believe we refer to it in the letter
as cash collection, a letter containing items sent
to other banks for collection and credit. There
are other records with respect to this transac-
tion." (R. 309).

With reference to Government's Exhibits 92, 93
and 94, Government's witness Evans testified as
follows :

"The J. E. Shreve mentioned in this debit
memo is not the defendant Jesse Shreve but is
Joseph E. Shreve. The Glen Perkins is the Glen
Perkins who is co-defendant in this case. The
entry on Government's Exhibit 92 for identifica-
tion was made by me. The original entry on
March 7th up to this part was made by me. The
first half of the card, over to the column
"amount", and all these items on the left, were
made by me, and this is one of the records of
the bank. It is an auxilliary or memorandum
record. We term it the liability ledger card, the
description of the note. The nature of the record
is what we call a liability record indicating the
amount of money being owed by any particular
borrower. That entry is a correct record of the
transaction which it purports to record. The
entry of March 7th, 1929, on Government's Ex-
hibit 93 in evidence, was made by me. It is
similar to the record in Government's Exhibit
92. These entries were made by me over to the
column "Amount". The right-hand entries were
not made by me. Government's Exhibit 94, the
entry on that exhibit is a similar exhibit as of
the bank. That entry was made by me also. All
of those entries which I have identified were

(78)

correct records of the transactions which they
purport to record.

MR. FLYNN: We offer in evidence, if the
Court please, the parts of Government's Exhibits
92, 93 and 94, which the witness has identified,
and in order to keep the record straight as to
the part of the exhibits which is going into the
record, we ask leave to read them into the rec-
ord. We are also offering the printed heading
which shows what the entries are in regard to.

MR. HARDY: (on voir dire examination of
the witness) Mr. Evans, did you testify that
these entries were made in your own handwrit-
ing, the ones referred to by Mr. Flynn?

A. Yes, the entries on the first line under
date of March 7th, over to that column including
the amount.

Q. Are those the first permanent entries
on that transaction, or are they reflected from
other records or memoranda of the Bank?

A. That is only an auxilliary record or mem-
orandum record.

Q. Well, is it the first record of the trans-
action ?

A. It is not.

Q. It is a secondary record?
A. A secondary record." (R. 311, 312).
Therefore, in addition to violating the decision
of this Court on the former appeal, admission of these
secondary records violates the best evidence and hear-
say rules prevailing in the following decisions:
Shreve vs. U. S., (CCA9) 77 Fed. (2nd) 2, 7.
Osborne vs. U. S., (CCA9) 17 Fed. (2nd) 246,
248.

(79)

Wilkes vs. U. S., (CCA9) 80 Fed. (2nd) 289,
290, 291, 292.

Greenbaum vs. U. S., (CCA9) 80 Fed. (2nd)
113, 121.

Chaffee vs. U. S., 18 Wall. 516, 21 L. Ed. 908.

Phillips vs. U. S., (CCA8) 201 Fed. 259.

Pabst Brewing Co. vs. E. Clemens Horst Co.,
(CCA9) 229 Fed. 913.

Beck vs. U. S., (CCA8) 33 Fed. (2nd) 107.

The testimony reveals that these defendants had
no connection with the First National Bank of Pres-
cott either as officer, director or employee. (Trott,
R. 300, Evans, R. 324, Faulkner, R. 337). There-
fore invoking the decision of this Court in Shreve
vs. U. S., supra, it was "essential to show that the
defendants made such entries, or caused them to be
made, or assented thereto." That decision was not
only ignored in admitting in evidence these records
of the First National Bank of Prescott, but it was
flagrantly violated.

2. The foregoing- records were not admissible under
the act of June 20, 1936 (Sec. 695, 695h, Title 28, USCA) be>
cause that act does not apply to this case, but, if it does,
then it is unconstitutional and void.^s

Defendants at the trial took the position that,
since Sec. 695, Title 28, USCA, did not become opera-
tive until June 20, 1936, it could not apply to this
case, because the indictment was returned on De-
cember 23, 1933 (R. 38) approximately two years
and a half before the act became operative. Besides,
Sec. 69 5h of the act provides that Sec. 695 shall be
prospective only, and not retroactive.

29. The applicable sections of the act are set forth in the
Appendix at pages 18, 19.

(80)

Defendants did not consider that, for the pur-
pose of preserving the question, they were required
to invoke the act on behalf of the Government, and
then attack its constitutionality. Counsel for the
Government met the objections to the admission of
these exhibits in evidence sub silentio (R. 300, 309,
312, 313). Counsel for defendants thought they were
not required to do more.

The act, by express terms, is inapplicable, and
it has been so construed.

Valli vs. U. S., (CCAl) 94 Fed. (2nd) 687.

However, if counsel for the Government, in meet-
ing the foregoing Assignments of Error, invoke the
act now for the first time, then defendants assert
that it is unconstitutional as applied to this case,
and to them, because:

(a) It dispenses with the necessity of confront-
ing defendants with the witnesses against them in
violation of the Sixth Amendment to the United
States Constitution.

U. S. vs. Elder, 232 Fed. 267, 268.

People vs. Vammar, 320 111. 287, 150 N.E. 628.

State vs. Shaw, 75 Wash, 326, 135 Pac. 20.

(b) It alters the legal rules of evidence, and
requires less or different testimony to convict de-
fendants than the law required at the time of the
commission of the alleged offense, and thus the act
is ex post facto in violation of Section 9, Article 1,
of the United States Constitution.

Malloy vs. South Carolina, 237 U. S. 180, 59

(81)
L. Ed. 905, 35 Sup. Ct. Rep. 507.^°

NINTH: THE TRIAL COURT ERRED IN ADMITTING TES-
TIMONY OF GOVERNMENT'S WITNESS SCHROEDER BASED
UPON HIS AUDIT OF BOOKS AND RECORDS OF CENTURY
INVESTMENT TRUST, ARIZONA HOLDING CORPORATION AND
SECURITY BUILDING AND LOAN ASSOCIATION. THE WIT-
NESS SCHROEDER TESTIFIED SAID AUDIT WAS MADE IN
PART FROM BOOKS AND RECORDS OF CORPORATIONS NOT
NAMED IN THE INDICTMENT, AND THE BOOKS AND REC-
ORDS OF SAID CORPORATIONS WERE NOT IN EVIDENCE OR
BEFORE THE COURT. FOR THESE REASOT^JS THE TRIAL
COURT ALSO ERRED IN REFUSING DEFENDANTS' MOTION TO
STRIKE THE TESTIMONY OF THE WITNESS SCHROEDER.

ASSIGNMENTS OF ERROR
XXI

The Court erred in permitting Government's wit-
ness Schroeder to testify from, and in regard to, a
summary which he made from books and records of
Arizona Holding Corporation, Century Investment
Trust and Security Building and Loan Association,
which testimony was admitted over the following ob-
jection and exception by counsel for defendants:

''MR. PETERSON : Q. From your examina-
tion of the books of the Security Building and
Loan Association now in evidence, did you de-
termine whether or not Loan 26, known as the
Rayburn Loan, is included in the figure of $193,-
929.46 set out in the financial statements of the
Security Building and Loan Association as of
December 31st, 1931?

MR. PETERSON: And add to that, Ex-

30. This question has been ably briefed in the case of Qreen-
baum vs. U. S.. No. 8739, now on appeal to the Court, by learned
counsel for appellants, and by learned counsel appearing amici
curiae. A further discussion of the question would add no ad-
vantage here. The decision of the Court in the Greenbaum case
undoubtedly will provide the rule of decision to be applied in
this case.

(82)

hibit No. 160, Loans secured by first mortgage
on Arizona real estate,

MR. HARDY: Now, your Honor, we object
to that for the reason that it has been testified
by the witness that his audit is not based entirely
upon the books and records of the corporations
named in this indictment which have been intro-
duced in evidence, or which are in Court, but that
it has been based upon and is reflected from the
examination of other records, books and docu-
ments of corporations, or from other sources which
are not in evidence, or before this Court, or avail-
able.

THE COURT : That is not the witness's tes-
timony. He said his audit is in connection with
the books in evidence, and in connection with that,
he made other investigations of other corpora-
tions, but his audit is based upon the books and
records introduced here in evidence. The objec-
tion is overruled.

MR. HARDY: Exception.

THE WITNESS: I believe that exhibit is
dated 1930, rather than 1931.

MR. PETERSON: December 31st, 1930?

A. Yes, Loan 26 is included.

Q. And from your examination of the books
in evidence, can you determine whether or not
Loan No. 37, known as the A. Y. York loan is
included in the figure of $193,929.46 set out in
Exhibit 160 in evidence, in the amount of loans
secured by first mortgages on Arizona real es-
tate?

MR. HARDY: Your Honor, for the purpose
of the record, may we have the same objection

(83)

to all this testimony without the necessity of re-
peating it?

THE COURT: Oh, yes.

MR. HARDY: And I understand that we
have an exception to the ruling of the Court?

THE COURT: All right.

THE WITNESS: It is." (R. 938).

XXII

The Court erred in refusing to strike the testi-
mony on direct examination of Government's witness
Schroeder, based upon a summary of books and rec-
ords of Century Investment Trust, Arizona Holding
Corporation and Security Building and Loan Asso-
ciation, for the following reasons urged at the close
of the direct examination of said witness:

"MR. HARDY: Now, may it please your
Honor, I desire to make a motion to strike all of
the testimony of the witness Shroeder based upon
his testimony and his audit generally, for the
reason that it now appears that his audit is made
with respect to the transactions about which he
testified upon the records of corporations not
named in the indictment, and upon records of
corporations which are neither in evidence nor
before this Court.

THE COURT: The motion is denied.

MR. HARDY: Exception." (R. 940).

The witness Schroeder was an auditor also em-
ployed as a special agent for the Federal Bureau of
Investigation (R. 654). He made an audit of the
books of Security Building and Loan Association,

(84)

Century Investment Trust and Arizona Holding Cor-
poration (R. 655). Defendants contend that the testi-
mony of the witness himself discloses he did not con-
fine his audit to those books, but utilized books and
records of other corporations not named in the in-
dictment, or bill of particulars, and other books and
records neither in evidence nor before the court.
Unless his testimony, based upon such audit, was
confined to books and records of Arizona Holding
Corporation, Century Investment Trust and Secur-
ity Building and Loan Association, then his testi-
mony was inadmissible under the objection made
thereto by defendants (R. 658, 659) following the
decisions of this Court in the following cases:

Wilkes vs. U. S., (CCA9) 80 Fed. (2nd) 285.

Greenhaumvs. U.S., (CCA9) 80 Fed. (2nd) 113.

Osborne vs. U. S., (CCA9) 17 Fed. (2nd) 246.

Pahst Brewing Co. vs. E. Clemens Horst Co.,
(CCA9) 229 Fed. 913.

At the time the objection was made to the ad-
mission of this testimony, the trial court made the
following observation:

'That is not the witness's testimony. He said
his audit is in connection with books in evidence,
and in connection with that, he made other in-
vestigations of other corporations, but his audit
is based upon the books and records introduced
here in evidence." (R. 658).

The witness, on voir dire examination, testified
in full substance as follows:

"I stated I made an examination of the books
of the Security Building and Loan Association,
Century Investment Trust and Arizona Holding
Corporation, for the purpose of making an audit

(85)

of those books. The books of those companies
which I examined are here in Court. The num-
bers of the exhibits which I examined are 61, 62,
63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 77,
78, 79, 80, 107 to 107-R, 108, 109, 110, 111 to
111-d, 112, 113, 126, 127, 185, 186, 187 and 189
to 202 inclusive, 203, 204. The numbers I have
read are solely the records of the Arizona Hold-
ing Corporation, the Century Investment Trust
and the Security Building and Loan Association.
They are not all the records which I have exam-
ined in connection with my avdit There are a
great quantity of records which I have examined
that are not in the court room and not in evidence.
They are records of the Overland Hotel Company,
public records of Pima County, Maricopa County,
Yavapai County, records of the First National
Bank of Prescott, records of various banks in the
southern part of California and Arizona, some
of Vv^hich records are here in evidence, some of
which are not, and som.e of which are not in the
court room. I also examined records in Yuma
County. I made an examination of the records
of banks in which these various companies had
bank accounts; Southwest Bank and Trust Com-
pany, either in Phoenix or Tucson; the First Na-
tional Bank of Prescott. I believe all the records
of the First National Bank of Prescott are here
except certain correspondence files and things
of that sort. I did make an examination of the
correspondence files of the First National Bank
of Prescott. I seem to recall having been at some
bank in California, I can't just name it now. I
don't remember making an examination of the
records of the California Savings and Commercial
Bank in San Diego, California. I believe I did

(86)

make an examination of a bank in San Diego in
connection with this case. As far as the Arizona
Holding Corporation and the Century Investment
Trust are concerned, the books here in court are
the only ones I have ever seen of those companies.
Now, so far as the Security Bmlding and Loan
Association is concerned, there are large binders
with thousands of sheets of pass book Jwlders'
accounts and books of that nature that are not
here in the court room, which I examined in con-
nection with this case and fronn which I made
my audit." (R. 655, 656).

Again the witness testified:

"I worked upon the records of the Commercial
National Bank in Phoenix in connection with the
audit I prepared in this case. I could not say
specifically in connection with which loans, prob-
ably in connection with somw of the loans which
I have testified to today. I haven't the notes which
I made from the records of the Commercial Na-
tional Bank. I don't know where they are." (R.
683, 684).

Again the witness testified, on re-direct ex-
amination :

"In so far as matters that I testified to 07i
direct examination was based upon my audit
which I made, and that audit was made solely
from books and records in evidence in this case."
(R. 687).

And again, on re-cross examination:

'*0n cross examination I think mention was
made of some other items, but they were not
offered, no reference was made to them. Rec-
ords of the First National Bank of Prescott and
the First National Bank of Phoenix and the Over-

(87)

land Hotel and Investment Company were men-
tioned but no reference was made to them. I
mentioned I examined them. Records of the First
National Bank of Prescott are in evidence and
in connection with the audit which I made." (R.
688).

In the latter part of the witness's testimony, as
quoted above, we think this Court will observe that
the witness sensed the predicament into which he had
led the Government. Before the testimony was ad-
mitted over the objection made, its competency should
have been more assuring than the record discloses.

TENTH: THE TRIAL COURT ERRED IN ADMITTING IN
EVIDENCE A MORTGAGE EXECUTED BY WM. H. PERRY TO
YAVAPAI COUNTY SAVINGS BANK BECAUSE IT IS A TRANS-
ACTION BETWEEN PARTIES NOT NAMED IN THE INDICT-
MENT; NO FOUNDATION WAS LAID FOR ITS ADMISSION;
AND IT IS HEARSAY. THE TRIAL COURT ALSO ERRED IN
ADMITTING IN EVIDENCE A SHERIFF'S DEED EXECUTED TO
SAID BANK FOLLOWING THE FORECLOSURE OF SAID MORT-
GAGE, BECAUSE NO FOUNDATION WAS LAID FOR ITS AD-
MISSION, AND, FURTHER BECAUSE THE PREUMINARY PRO-
CEEDINGS LEADING UP TO THE EXECUTION OF SAID SHER-
IFF'S DEED WERE NOT IN EVIDENCE, AND SUCH PROCEED-
INGS WERE THE BEST EVIDENCE TO SUPPORT THE ADMIS-
SION OF SAID SHERIFF'S DEED IN EVIDENCE.

ASSIGNMENTS OF ERROR

XXVI

The Court erred in admitting in evidence Govern-
ment's Exhibit 170, which was received in evidence
over the following objection and exception by counsel
for defendants:

"MR. HARDY: Your Honor, we object to
the introduction of Government's Exhibit 170 as
identified here by Mr. Russell, for the reason it

(88)

appears to be a mortgage executed from a person
by the name of Perry, to the Yavapai County
Savings Bank, a corporation, which is not a cor-
poration named in the indictment herein, and for
the reason that it appears to be immaterial and
has no bearing upon the issues in this case. It is
a hearsay transaction in so far as those defend-
ants are concerned; no proper foundation has
been laid for its admission.

THE COURT: Overruled.

MR. HARDY: Exception.''

The full substance of said exhibit is as follows:
Original mortgage executed April 16, 1930, by Wm.
H. Perry, a widower, mortgaging to Yavapai Coun-
ty Savings Bank, a corporation, real estate situated
in Yavapai County, Arizona, described as all that
certain real estate and property particularly describ-
ed as follows: All that portion of the Southwest
Quarter of the Northwest Quarter of Section Thirty-
three (33) in T. Fourteen (14), North of Range
Two (2) West of the Gila and Salt River Base and
Meridian, in Yavapai County, Arizona, bounded and
described as follows: Beginning at the West quarter
corner of said Section 33, above Township and Range,
thence North 0° 08' W. 258.0 feet; thence N. 89' 20'
E. 202.3 feet to a stake which is the actual point of
beginning; then S. 75° 17' E. 196.3 feet to an iron
pin; thence No. 12° 09' E. 51.4 feet to a cross on a
rock; thence N. 18° 42' E. 56.4 feet to a cross on a
rock; thence N. 36° 36' W. 56.4 feet to an iron pin
marking the Northeast corner of said premises;
thence N. 83° 34' W. 173.4 feet to the Northwest
corner of said premises; thence S. 09* 41' W. 60 feet
to an iron pin; thence S. 02° 47' W. 60 feet to the
point of beginning. Acknowledged same date before

(89)

R. 0. Barrett, Notary Public Yavapai County, Ari-
zona; secures payment of promissory note of even
date of mortgage in the sum of $2500.00; recorded
at request of Guarantee Title & Tr. Co., April 16,
1930, with the County Recorder of Yavapai County,
Arizona. (R. 946).

XXVII

The Court erred in admitting in evidence Govern-
ment's Exhibit 172, which was received in evidence
over the following objection and exception by coun-
sel for defendants:

''MR. HARDY: We object to its receipt in
evidence, your Honor, upon the grounds that no
foundation has been laid for its admission, and
the preliminary proceedings leading up to the
execution of this Sheriff's deed are not in evi-
dence, and they are the best evidence in order
to support the admission of this document.

THE COURT: Overruled.

MR. HARDY: Exception."

The full substance of said exhibit is as follows:
Sheriff's deed dated May 3, 1930, executed by George
C. Ruffner, Sheriff of Yavapai County, Arizona,
conveying to Yavapai County Savings Bank, a cor-
poration, property situated in Yavapai County, Ari-
zona, described in Government's Exhibit 170; deed
executed in consideration of $2750.00 paid by Yav-
apai County Savings Bank to said Sheriff under
certificate of sale on foreclosure covering said prem-
ises; recorded at request of Favour & Baker, May 3,
1935, Book 158 of Deeds, page 234, records of Yav-
apai County, Arizona (R. 947).

(90)

Assignment of Error XXVI. This AssigTiment
of Error pertains to the admission in evidence of
Government's Exhibit 170, v^hich is a mortgage exe-
cuted by Wm. H. Perry to Yavapai County Savings
Bank. The mortgage was identified by Government's
v^itness Russell who was the secretary of Yavapai
County Savings Bank (R. 547). The property describ-
ed in the mortgage is the same property described in
a deed executed by Dean B. Blackburn to Arizona
Holding Corporation, embraced by Government's Ex-
hibit 144 (R. 517). Blackburn did not testify. The
exemplified copy of the deed executed by Blackburn
was received in evidence, over the objection of de-
fendants, without further proof than exemplification
(R. 516, 517, 518). The Blackburn deed, therefore,
falls within the objection made to its admissibility,
which were made to instruments of the same import,
heretofore discussed in AssigTiment of Error XIII, IX,
X and XII. Manifestly, the Perry mortgage (Govern-
ment's Exhibit 170) was introduced in evidence for
the purpose of showing that, whereas Blackburn
deeded the property to Arizona Holding Corporation,
the property was, in fact, owned by Perry, who mort-
gaged it to Yavapai County Savings Bank. Obvious-
ly, the Perry mortgage was not admissable, because
Perry was not called to testify with respect thereto,
and no competent proof was offered to show that
Perry owned the property described in his mort-
gage, or that Blackburn himself did not own the
property.

The effect of the evidence is this: Since Black-
burn conveyed to Arizona Holding Corporation iden-
tical property conveyed by Perry to Yavapai County
Savings Bank, then Blackburn could not have owned
the property which he conveyed. Neither Blackburn,
nor Perry, testified they owned the property. The

(91)

only evidence of ownership by Perry is the inference
arising from the evidence that a party by that name
mortgaged the property to Yavapai County Savings
Bank.

With this state of the record, therefore, the ob-
jection that the Perry mortgage was hearsay, and
that no proper foundation had been laid for its ad-
mission, was sound (R. 547, 548).

22 C. J. p. 974, Sec. 1220.

Assignment of Error XXVIL This Assignment of
Error relates to the admission in evidence of Gov-
ernment's Exhibit 172 (R. 551, 552) which is a sher-
iff's deed presumably issued after the sale under the
judgement foreclosing the Perry mortgage referred
to in the foregoing Assignment of Error XXVI.

The trial court admitted in evidence the sheriff's
deed over the objection that no foundation had been
laid for its admission; that the preliminary proced-
ings leading up to the execution of the sheriff's deed
were not in evidence ; and that such proceedings were
the best evidence to support the admission of the
sheriff's deed (R. 551).

Neither of these defendants, nor the corporations
named in the indictment, were parties to the pro-
ceedings foreclosing the mortgage. And, again, Yav-
apai County Savings Bank, the grantee under the
sheriff's deed, was not mentioned in the bill of par-
ticulars, which was the ground of another objection
(R. 550).

We are at a loss to understand upon what theory
counsel for the Government offered this sheriff's
deed, or upon what rule of law the trial court relied
to permit of its admission in evidence, in view of

(92)

the state of the record and the objections made to it.
Unquestionably, before the sheriff's deed was ad-
missible at all, the preliminary foreclosure proceed-
ings should have been first proved, as was raised by
the objection, because otherwise no foundation what-
ever was laid to permit the sheriff's deed to be re-
ceived in evidence. 34 C. J. p. 1067, Sec. 1508.

The rule of evidence violated here is one of im-
memorial recognition. It is stated, in common with
other courts, by the Supreme Court of Arizona, in
the case of Mutwxl Benefit Health & Accident Ass'n
vs. Neale, 43 Ariz. 532, 546, 33 Pac. (2nd) 604, 610,
as follows:

*'As a matter of common law, it has long been
the rule that a judgment in personam, as against
any person who is a stranger to the cause, is
evidence only of the fact of its own rendition,
and may not be introduced to establish the facts
upon which it has been rendered. (Citing au-
thorities). And the test of whether a person is
a stranger is whether he was interested in the
subject-matter of the proceeding, with the right
to make defense, to adduce testimony, to cross-
examine the witnesses on the opposite side, to
control in some degree the proceeding, and to ap-
peal from the judgment. (Citing authorities."
(Italics supplied).

Since the judgment was not admissible in evi-
dence against these defendants, then the sheriff's
deed, following the judgment, for more cogent reasons
was inadmissible. Here we simply have the sheriff's
deed. The preliminary proceedings authorizing it
are not in evidence, — not even the judgment. In fact,
the trial court gave the sheriff's deed more approba-

(93)

tion than the law gives judgments as between strang-
ers to them. For illustration :

"A judgment is not admissible in evidence
against a person who was not a party, nor in
privity with a party, to the suit wherein it was
rendered, or at least it is not admissible against
him as evidence of the facts which it adjudi-
cates or determines or on which it is based, and
which are in issue in the subsequent action, un-
less the judgment or decree is in rem, although
it may be evidence of certain other matters. Cer-
tainly, as against a person who is not a party to
the action, nor in privity with a party, a judg-
ment is not conclusive evidence of the facts deter-
minded thereby. Some courts hold that, although
a judgment may not be binding or conclusive on
a third person, nevertheless it may be competent
against him to prove prima facie the facts re-
cited therein; but other courts hold that if, by
reason of lack of identity of parties, it is not con-
clusive of the questions of fact involved therein,
it is not even a circumstance which the jury may
consider on that point." 34 C. J. p. 1050, Sec.
1484.

See also 34 C. J. p. 1043, Sec. 1480.

The harm is obvious, since the Perry mortgage
struck directly at the bona fides of the Blackburn
deed.

ELEVENTH: THE TRIAL COURT ERRED IN ADMITTING
TESTIMONY OF GOVERNMENT'S WITNESS YORK CONCERN-
ING COMMUNICATIONS BETWEEN THE WITNESS AND HIS
DAUGHTER RELATING TO TRANSACTIONS ON BEHALF OF
ONE OF THE CORPORATIONS NAMED IN THE INDICTMENT,
BECAUSE THE TESTIMONY WAS HEARSAY. FOR THIS REASON

(94.)

THE TRIAL COURT ALSO ERRED IN REFUSING DEFENDANT'S
MOTION TO STRIKE THE TESTIMONY.

ASSIGNMENT OF ERROR

XXVIII

The Court erred in admitting the testimony of
Government's witness A. W. York, which was ad-
mitted over the following objection and exception by
counsel for defendants:

THE WITNESS: "Q. Did you, on or about
the 20th day, about the month of December, 1930,
mortgage any property in Navajo County, Ari-
zona, to the Security Building and Loan Associa-
tion? A. I signed a mortgage, yes, sir. Q. And
where did you sign that mortgage? A. Oakland.
Q. In Oakland? A. Yes, sir. Q. How did you
happen to sign that mortgage?

MR. HARDY: Now, your Honor, we object
to the answer to that question, because no con-
nection has been shown that would justify an
answer by the witness to that question, and for
the further reason that up to that time no proper
foundation has been laid with respect to any
testimony with respect to the mortgage.

THE COURT: Go ahead, read it.

MR. HARDY: Exception.

THE WITNESS: A. My daughter wrote
me — Mr. Crouch: We did not hear. The wit-
ness: My daughter wrote me that the Company
she had been connected with had a proposition
for me and wanted me to sign some papers.

MR. HARDY: Now, your Honor, we move
that that answer be stricken, because it is hear-

(95)

say testimony as to these defendants, a letter
from his daughter to him.

THE COURT: It may stand. Go ahead.

MR. HARDY: Exception.

THE WITNESS: My daughter wrote me
saying that the Company that her husband was
conected with had a proposition for me in Ari-
zona and that they had something for me to sign,
the purpose, as I later on understood, was for
me to come over here and take charge of a ranch
in the vicinity of Holbrook." (R. 948).

The witness York testified on behalf of the Gov-
ernment at the former trial of this case, but died be-
fore this retrial of the case (R. 558). His testimony
given at the former trial was read by Government's
witness Walker, who reported the tstimony on the
first trial (R. 558). York and his wife executed a
mortgage to Security Building and Loan Association
on property therein described, an exemplified copy
of which was received in evidence as Government's
Exhibit 175 (R. 562). (This is also one of the in-
struments referred to in Assignments of Error VIII,
IX, X, XI, and XII.) Over the objection of defend-
ants, the witness York testified his daughter wrote
him that the company she had been connected with
had a "proposition" for him to sign some papers
(R. 560, 561). He did sign the mortgage referred to,
which was delivered to Security Building and Loan
Association (R. 562). The witness York was the
father-in-law of defendant Perkins, who, as we have
seen, testified as a witness on behalf of the Govern-
ment (R. 558). No testimony was given that either
of these defendants prompted Perkins' wife to write

(96)

her father concerning this transaction, or that they
even knew about it. Accordingly, in a most flagrant
aspect, testimony of the witness York concerning
communications between his daughter and him was
hearsay. The mortgage which the witness York, and
his wife, signed, embraced lands owned by John
McLaws and Nellie McLaws, which the witness York
testified he did not purchase from them (R. 559,
560). (Compare Government's Exhibit 175 (R. 562)
and Government's Exhibit 178 (R. 567). The mort-
gage was also signed by Fannie York, wife of the
witness York, but she did not testify, and further
objection was made to the admission of the mortgage
in evidence on that ground (R. 562).

The error of this hearsay testimony is so obvious
that we hesitate to burden the Court with argument
on it. Communications between the witness York and
his daughter, without proof that they were prompted
by these defendants, or that they knew about them,
totally ignored the rule against hearsay evidence.

Having heard the testimony, it should then, at
least, have become evident that it was hearsay. Hence,
the trial court should have granted defendants' mo-
tion to strike it (R. 560, 561).

If, as often seems peculiar to mail fraud cases,
defendants are to be stripped of the protection which
fundamental rules of evidence accord them, then the
time is opportune, it seems to us, for this Court to
emphasize that convictions following such methods
will be corrected to the end that procedure under
salutary standards of law may be preserved. A sim-
ilar circumstance prompted this Court to reverse the
judgments on the former appeal.

Shreve vs. U. S., 77 Fed. (2nd) 2, 5.

(97)

TWELFTH: THE TRIAL COURT ERRED IN REFUSING TO
PERMIT DEFENDANTS' WITNESS CRANE, A CERTIFIED PUB-
LIC ACCOUNTANT, TO TESTIFY THAT PRACTICES OF AC-
COUNTING INDULGED IN BETWEEN CENTURY INVESTMENT
TRUST AND SECURITY BUILDING AND LOAN ASSOCIATION,
AS RELATED BY GOVERNMENT'S WITNESS FIERSTONE, WERE
IN ACCORD WITH ACCEPTED ACCOUNTING PRINCIPLES.

ASSIGNMENT OF ERROR

XXIX

The Court erred in refusing to permit defendants'
witness Crane to testify, on direct examination, over
the following objection by counsel for the Govern-
ment, and exception by counsel for the defendants,
as follows:

"Q. Is it in accordance with the accepted ac-
counting principles for a holding company to ab-
sorb a charge to the cost of this investment in a
subsidiary corporate company, proportions of the
expense of the operation of a subsidiary?

MR. FLYNN : Object to that on the ground
it is invading the province of the jury and calling
for a conclusion and opinion.

MR. HARDY: He is an expert, your Honor,
and I asked him about the accepted practice of
accounting.

THE COURT: Oh, well, let the jury deter-
mine that.

MR. HARDY: Exception, please. With re-
spect to this character of accounting as between
a holding company and its subsidiary, can you
state, as a Certified Public Accountant, whether

(98)

that manner of accounting between the holding
company and a subsidiary is approved by the
Internal Revenue Bureau of the United States
Government?

MR. FLYNN : Object to that on the ground
it is immaterial and that it does not tend to prove
or disprove any of the issues in this case, and
calling for a conclusion and opinion of the wit-
ness and invading the province of the jury.

THE COURT: Sustained.

MR. HARDY: Exception." (R. 950).

Government's witness Fierstone, as we have seen,
audited the books of Century Investment Trust and
testified from that audit (R. 694, 695). During the
giving of testimony, he referred to expense items of
Security Building and Loan Association which were
paid by Century Investment Trust. The full sub-
stance of his testimony in this respect is as follows:

''Well, on December 31st, 1929, the Tucson
office of the Building and Loan Association had
a loss of $1,513.65, which was assumed by the
Century Investment Trust and added to the cost
of this stock. On October 31st, 1930, the Cen-
tury Investment Trust had spent $17,552.39 as
expenses or advances to the Security Building and
Loan Association during the preceding year, so
that sum was added to the cost of the stock, and
on October 31st, 1931, the sum of $20,391.46 was
also added to the valuation of that stock, repre-
senting sums paid out as expenses and advances
to the Security Building and Loan Association

(99)

during the preceding year. Those several addi-
tions, plus the original cost, add up to $99,457.50.
The Century Investment Trust had been in busi-
ness, as evidenced by the books of the company
on December 31st, 1929, two months." (R. 705).

On cross examination the witness Fierstone fur-
ther testified as follows:

**I stated that there is carried forward on the
Century Investment Trust books an account call-
ed 'Security Building and Loan Association ex-
penses' amounting to $21,868.88. The break-
down on that figure is: the books of the Century
Investment Trust carried an account known as
408, or 101, labelled 'Security Building and Loan,
Phoenix, Expense.' For the twelve months end-
ing October 31st, 1930, the balance in that ac-
count was $16,933.23. Of that amount $303.79
occurred in November and December, 1929. Now,
the same account in November and December,
1930, is reflected $5,239.44. By taking out the
two months of November and December of 1929,
and adding the two months of November and
December, 1930, would give you a figure for the
twelve calendar months of January to December,
1930, amounting to $21,868.88. I didn't make
any allocation of the several items of the salary
account for that period. The salaries comprises
a substantial part of it. The salaries of D. H.
Shreve, G. 0. Perkins, R. F. Watt and E. F.
Young, and I believe M. Gondie. There is noth-
ing set up there at all for J. H. Shreve or A. C.
Shreve. There is nothing in the books to show
who the people I have named were working for.
I don't know whether they were working for both
the Century Investment Trust and the Security

(100)

Building and Loan Association. But those sal-
aries are charged in that account and added to
the cost of the stock of the Security Building and
Loan Association, which was carried on the books
of the Century Investment Trust. Whether it
is unusual depends upon your method of book-
keeping. Some people add the expense of the com-
pany to the cost of stock. It would all depend
upon other circumstances, and you can't lay down
a general rule on that. Some public utilities
companies do it to a certain extent. I have never
done any income tax work so I don't know any-
thing about the permissible practice for the In-
come Tax Bureau and other agencies of the Gov-
ernment." (R. 717, 718).

Defendants' witness Crane, referred to in the
foregoing Assignment of Error, was a certified pub-
lic accountant (R. 830). He had made an audit of
the boks of Security Building and Loan Association
from its inception to November 14, 1931, at the di-
rection of the Superior Court of Maricopa. County,
Arizona, in receivership proceedings (R. 830). De-
fendants sought to have the witness Crane testify, as
an expert, upon the question of approved accounting
practices with respect to Century Investment Trust,
as a holding corporation, in absorbing expenses of
its subsidiary. Security Building and Loan Associa-
tion. The witness Crane had testified, in full sub-
stance, as follows:

**I heard the testimony of Mr. Fierstone to the
effect that during the period of December 31st,
1930, certain items of expense in connection with
the operation of the Security Building and Loan
Association were paid or obsorbed by the Century
Investment Trust." (R. 834).

(101)

Thereupon he was asked, as shown by the fore-
going Assignment of Error, the following questions
by counsel for defendants:

"Q. Is it in accordance with the accepted ac-
counting principles for a holding company to ab-
sorb a charge to the cost of this investment in a
subsidiary corporate company, proportions of the
expense of the operation of a subsidiary?

MR. FLYNN : Object to that on the ground
it is invading the province of the jury and calling
for a conclusion and opinion.

MR. HARDY: He is an expert, your Honor,
and I asked him about the accepted practice of
accounting.

THE COURT: Oh, well, let the jury deter-
mine that.

MR. HARDY: Exception, please. With re-
spect to this character of accounting as between
a holding company and its subsidiary, can you
state, as a Certified Public Accountant, whether
that manner of accounting between the holding
company and a subsidiary is approved by the In-
ternal Revenue Bureau of the United States Gov-
ernment? (R. 834).

The United States Attorney objected on the ground
the question was immaterial; that it did not tend to
prove or disprove any issues in the case; that it call-
ed for a conclusion and opinion of the witness; and
invaded the province of the jury (R. 835). The court

(102)

sustained the objection and defendants excepted (R.
835).

Previously the court, as we have shown, refused
to permit defendant Archie C. Shreve to testify with
respect to conversations between Government's wit-
nesses Perkins and Hobbs, about which they had
testified.^' In giving their defense, that was dis-
couraging enough, but now the trial court refused
to permit defendants' witness Crane to give his ex-
pert opinion with regard to accounting methods
about which Government's auditor Fierstone had
previously testified. The advantage was all on the
side of the Government. The trial judge disposed
of defendants' contention by remarking, **0h, well,
let the jury determine that". (R. 834). All the jury
had before them upon which to determine the ques-
tion was the one-sided testimony of Government's
witness Fierstone.

The case of Rowe vs. Whatcom County Ry. &
Light Co., 44 Wash. 658, 87 Pac. 921, confirms the
error. The action was for damages for personal in-
juries. Physicians called by defendant testified to
the character of plaintiff's injuries and the tests
applied to determine it. The trial judge refused to
permit the physician called by plaintiff to give tes-
timony in contradiction of the physicians called by
defendant, because he thought, as the trial judge
thought here, the question was for the jury. The
Supreme Court of Washington held this was error.
The case should be accepted as a satisfactory preced-
ent by this Court, because by coincidence the opinion
was written by Judge Rudkin while sitting as a

31. Assignments of Error III, IV, V, VI, and XXXV, supra.

(103)

member of the Supreme Court of Washington, and
the trial in the lower court was presided over by
Judge Neterer. Judge Rudkin, then speaking for the
Supreme Court of Washington (87 Pac. 922) said:

"The reason assigned by the court for its rul-
ing was that the question whether the tests ap-
plied by the witnesses for the respondents were
fair or proper was for the jury. In this the
court erred. The witness was asked his opinion on
a matter involving scientfic and technical knowl-
edge, not within the experience of the ordinary
witness or juror, and should have been permitted
to answer * * *".

Upon the question generally see: 22 C. J.
p. 737, Sec. 827.

THIRTEENTH: THE TRIAL COURT ERRED IN CHARGING
THE JURY WITH RESPECT TO DENFENDANS' CONNECTION
WITH THE SCHEMES ALLEGED IN THE INDICTMENT; AND
THE TRIAL COURT ALSO ERRED IN REFUSING TO INSTRUCT
THE JURY WITH RESPECT TO THE FAILURE OF PROOF CON-
CERNING THE ALLEGATION IN THE INDICTMENT THAT DE-
FENDANTS FALSELY REPRESENTED THAT SECURITY BUILD-
ING AND LOAN ASSOCIATION HAD A PAID-IN CAPITAL STOCK
OF $300,000.00.

ASSIGNMENT OF ERROR
XXXII

The Court erred in charging the jury as follows:

"On the question of the birth of the alleged
schemes, all the Government need to prove is that
that happened when fraud of the character denounc-
ed by the indictment was first consciously and inten-
tionally practiced by one or more of the parties

(104)

charged therewith. If it may have been only a de-
velopment consciously brought into action out of a
scheme in its origin legitimate and honestly inten-
tioned, proof of that fact, convincing beyond a rea-
sonable doubt would be sufficient, and if you are
convinced beyond a reasonable doubt that these de-
fendants, or either of them, were at any of the times
a party to a scheme to defraud, as charged in the
indictment, a withdrawal from such scheme could not
be effected by intent alone. There must have been
some affirmative action on the part of the defend-
ants to effect such withdrawal." (R. 953).

Defendants excepted to the foregoing charge for
the reason that the Court did not define to the jury
what would constitute an affirmative act (R. 896).

XXXIII

The Court erred in refusing to include in its
charge defendants' requested instruction number 43,
which is as follows:

''You are instructed that there has been no
evidence introduced or received in this case that
the defendants, or either of them, made or caused
to be made any representations that the Security
Building and Loan Association had a paid-in
capital stock of $300,000.00, as alleged in the
indictment." (R. 954).

Assignment of Error XXXII. Under the indict-
ment allegations, the alleged schemes had their birth
upon the organization of Arizona Holding Corpora-
tion, Century Investment Trust and Security Build-

(105)

ing and Loan Association. The issue was raised not
only to defendants' participation in the schemes, but
also with respect to their withdrawal from participa-
tion in the management of the last named corpora-
tions. The defendant Archie C. Shreve testified that
when their brother, Daniel H. Shreve, came to Phoe-
nix, the latter took control and management of the
corporations. (R. 769, 770). His testimony is sup-
ported by the testimony of Government witness Hobbs
(R. 403, 404, 580, 581). Undoubtedly, this testi-
mony prompted the trial court to give the instruction
embraced in the foregoing Assignment of Error
XXXII.

Upon the question of withdrawal from the
schemes, the court charged the jury that it could not
be effected by intent alone, but that the withdrawal
must have been manifested by some ''affirmative
action" on the part of the defendants "to effect such
withdrawal." (R. 868). Defendants excepted to the
charge because the court did not define what would
constitute an affirmative act which would effect the
withdrawal. (R. 896). Were these acts manifested by
formal resignations from the officerships and boards
of directors of these corporations, or by the formal
action of the boards of directors accepting such resig-
nations, or by operation of law, or how? Judge Wil-
bur, when speaking for the Supreme Court of Cali-
fornia in Young vs. Southern Pacific Co., 182 Cal.
369, 190 Pac. 36, 41, in commenting upon the failure
of the trial court to define in an instruction the term
"proper warning" in its application to negligence,
said:

"Aside from the proposition that this instruc-
tion submitted to the jury, without any standard

(106)

for the determination of the same, the question of
what constituted 'proper warning' of the danger
of the approaching train, the instruction was ob-
jectionable because the complaint did not allege
the failure to have a flagman at the crossing as
a basis of the claim of negligence. The instruc-
tion should not have been given."

The court should always explain the meaning of
legal or technical terms occurring in its instruc-
tions.

64 C. J. p. 617, Sec. 556.

Buckeye Coiton Oil Co. vs. Sloan (CCA6) 250

Fed. 712, 725, 726.

Assignment of Error XXXIII. The indicement
alleges that defendants falsely represented that $300,-
000.00 of the capital stock of Security Building and
Loan Association had been paid in, whereas the paid-
in capital stock did not exceed $45,000.00. (R. 5, 6).
Not one syllable of evidence was introduced by the
Government to prove that allegation. Therefore, de-
fendants requested the trial court to instruct the
jury (requested instruction No. 43) that no evidence
had been received that defendants caused such rep-
resentation to be made. (R. 898). The trial court
refused to give the requested instruction (R. 895).^*

32. It should be said that, whereas defendants actually ex-
cepted to the refusal of the trial court to give this Instruction,
the exception does not appear in the bill of exceptions. The trial
court designated defendants' requested instructions which were
refused (R. 894) and the reporter's transcript of the testimony
discloses that defendants made the following exception:

"MR. HARDY: May we have an exception, your Honor,
to those instructions requested by the defendants which were

(107)

Assuming this Court will consider the error assigned,
it seems sufficient to say that, since the record does
not disclose any proof whatever of this indictment
allegation, it was clearly erroneous for the court to
refuse the requested instruction.

FOURTEENTH: THE COURT ERRED IN DENYING DE-
FENDANTS' MOTION FOR AN INSTRUCTED VERDICT BE-
CAUSE THE EVIDENCE WAS INSUFFICIENT TO PROVE THAT
THESE DEFENDANTS USED THE MAILS TO EXECUTE THE
SCHEMES, OR ANY OF THEM, ALLEGED IN THE INDICTMENT.

ASSIGNMENT OF ERROR
XXXIV

The Court erred in denying defendants' motion
for an instructed verdict made at the close of the
Government's case, and at the close of the whole case,
for the reason that the evidence was insufficient to
prove the offenses charged, for the following reasons :

1. The evidence was insufficient to prove the
commission by said defendants, or either of them, of
the alleged offenses charged in the indictment.

2. The evidence was insufficient to prove that
said defendants, or either of them, placed or caused
to be placed in the United States Post Office for the
District of Arizona, the letters and printed matter
set forth in the indictment.

3. The evidence was insufficient to show or prove

refused or not given by your Honor, and may that exception
go to each of those which were refused separately?"
We appreciate the rule that, in order for claimed error to be
reviewable, the exception to it must be embodied in the bill of
exceptions (O'Brien, Manual of Federal Appellate Procedure, p
20) but this Court may notice the error, although the exception
does not appear in the record. Id. p. 21.

(108)

that said defendants, or either of them, did, or could,
by the mailing of the letters or printed matter re-
ceived in evidence, execute the schemes or artifices
set forth in the indictment (R. 954).

At the close of the Government's case, defendants
presented a v^ritten motion for an instructed verdict
directed to each count of the indictment (R. 730).
The motion was comprehensive (R. 101, 121) but
only that part of it which relates to the sufficiency
of the evidence to connect these defendants with mail-
ing the indictment letters is now invoked. Although
separately stated, the grounds of the motion were
the same as to each count (R. 730, 101). At the close
of the whole case, the motion was again presented.
(R. 849). The trial court denied the motion, and
defendants excepted. (R. 732, 849).

Section 338, Title 18, USCA, confers jurisdiction
upon federal courts to try the offense there denounc-
ed only when the United States Mails are used for the
purpose of executing a fraudulent scheme. The schem.e
may be ever so wicked, but, unless the mails are used,
the Federal courts have nothing to do with it.

The question is not raised that the indictment
letters were not mailed by someone, or that they
were not received by the persons named in the in-
dictment. Defendants' position is that the evidence
does not disclose they had anything to do with mail-
ing the letters.

The receipt of the indictment letters through the
mails by the addresses named therein is no proof that
these defendants, or either of them, mailed them. As
was said in Freerruin vs. United States (CCA3) 20
Fed. (2d) 748, 750:

(109)

"The basic element of the offense is the plac-
ing of a letter in the United States mail for the
purpose of executing such a scheme. That is
what makes it a federal offense. It is defined
in the statute, must be alleged in the indictment,
and must be proved. How? The Government says
that is may be proved by the presumption aris-
ing from the postmark, * * * or, under the gen-
eral rule that a postmark is prima facie evidence
that the envelope had been mailed, * * * That,
concededly, is the rule in civil cases; but it leaves
unanswered the question — , vital in criminal
cases — who mailed it?^^

Again, it is said in Beck vs. United States (CCA8)
33 Fed. (2d) 107, 111:

"That the mails were used is clear. That the
defendant Beck is bound if Barrett used the mails
in the ordinary course is not open to serious dis-
pute. The law does not now require an intent to
use the mails as part of the scheme, as formerly.
It is sufficient if they are used. Beck placed
Barrett in the position of general ma.nager of the
corporation, leaving to him the direct manage-
ment of the business while Beck primarily looked
after his own business. Beck employed and paid
stenographers, which shows a contemplated use
of the mails. Aside from the fact that the letters
purport to bear BarretVs signature, the record
is barren of proof that he signed them or mailed
them. This is insufficient to bind either Barrett
or Beck.^' (Italics supplied).

The indictment letters received in evidence, and
the proof of their mailing, disclose that not one of

(110)

them was signed or mailed by either defendant. If
there could be any doubt with respect to this state-
ment, it is entirely dissipated by the frank, but ac-
curate, statement of the United States Attorney dur-
ing an objection made by him to testimony of defend-
ant Archie C. Shreve, concerning the letters, when
he interposed the following significant objection:

"Q. (propounded to defendant Archie C.
Shreve by his counsel) : Were any of those ex-
hibits, to your knowledge, prepared in San Diego,
California?

A. They were not.

Q. Were any of them ever prepared, or was the
preparation or the supervision of any of them
done in San Diego, California?

MR. FLYNN: Just a minute, we object to
that on the ground that no foundation has been
laid, has not been shown he had knowledge of
where or how or who 'prepared them, or who
didn^t prepare them, therefore, his testimony is
incompetent.

THE COURT: Yes; he doesn't know where
they were prepared (R. 794, 795, 796).

Coming, as it does, from the United States At-
torney, this statement in itself demonstrates the er-
ror assigned. While the factual aspect of the objec-
tion related to defendant Archie C. Shreve only, it
applies with equal force to defendant Jesse H. Shreve,
because the condition of the record in this respect,
as to both defendants, is identical. It is incredible

(Ill)

that one could mail a letter with criminal intent who
did not know how, or who prepared it, or who didn't
prepare it, as said by the United States Attorney.

Let us fortify the statement of the United States
Attorney by the record. Government's witnesses
Hobbs, Watt, Shumway and Perkins gave the only
testimony relating to the mailing of these letters.
Their testimony is important, and, in order that it
may be conveniently marshalled, it is set forth in
the Appendix to this brief beginning at page 30.

The testimony adverted to, and which we have
set out in the Appendix to this brief, constitutes the
case for the Government insofar as the mailing of
the indictment letters is concerned. ^'* When analysed
it shows this:

(a) Neither of these defendants signed, or per-
sonally mailed the letters.

(b) It was a business custom to mail the let-
ters.

(c) The letters were mailed in the general or
regular course of business.

A business custom may be sufficient to establish
the mailing of the letters, but the evidence must
show, as was said in Freeman vs. U. S., (CCA3) 20
Fed. (2nd) 748, 750, that it was a "business custom
of defendants^ The Government has not shown that
by the evidence. True, circumstantial evidence of

34. The defendant Archie C. Shreve testified: "I never heard
of any of these letters or knew anything about them, or had
anything to do with them in any manner whatsoever. The first
time I knew about them was at the inception of this lawsuit
when the indictment was returned. They might have been set
forth in the other indictment." (R. 796).

(112)

mailing is sufficient, which might comprehend mail-
ing "in the general or regular course of business/'
But those circumstances must comprise acts or facts
directly attributable to these defendants. Freeman
vs. U. S., supra. In the case of Greenhaum vs. U. S.,
80 Fed. (2nd) 113, 125, circumstantial facts of mail-
ing the indictment letter were held sufficient to
bind the defendants Greenbaum, but the opinion sig-
nificantly states that the letter there involved was
mailed by the ''admitted secretary and agent of the
Greenbaums."

There is no direct evidence that these defendants
mailed the indictment letters. If it is suggested that
there are circumstances of their mailing them, then
it should be said that, since the use of the mails is
the sine qua non of the crimes charged, then circum-
stantial evidence of mailing should be proved beyo^nd
a reasonable doubt. The circumstances established
fall far short of proving, beyond a reasonable doubt,
that these defendants mailed the letters.

Whatever may be the rule elsewhere (16 C. J.
Sec. 1571, p. V66) the Federal courts hold that all
circumstantial facts essential to conviction must be
proved beyond a reasonable doubt. The Circuit Court
of Appeals for the First Circuit, in Roukous vs. U. S.,
195 Fed. 353, states the rule as follows:

''Therefore, remembering that, while it is not
necessary that any particular circumstance should
of itself be sufficient to prove a criminal case be-
yond a reasonable doubt, yet it is necessary that
each circumstance offered as a part of the com-
bination of proofs should itself be maintained be-
yond a reasonable doubt, and should have some

(113)

efficiency, so far as it has efficiency to a greater
or less range, beyond a reasonable doubt, and at
least be free from the condition of being as con-
sistent with innocence as with guilt, * * ♦"

The case here fits squarely into the pattern of
the foregoing decision.

In reversing the District Court for the District
of Arizona, in the case of Paddock vs. U. S., 79 Fed.
(2d) 872, 875, 876, this Court, speaking through
Judge Wilbur with regard to an instruction dealing
with the probative effect of circumstantial evidence
in a fraud case, said:

'The rule with reference to the consideration
of circumstantial evidence by the jury is thorough-
ly settled. This rule in brief is that the circum-
stances shown must not only be consistent with
guilt, but inconsistent with every reasonable
hypothesis of innocence. 2 Brickwood Sackett In
structions to Juries, Sec. 2491, et seq. We have
said that this well-settled instruction in regard
to the degree of proof required where circum-
stantial evidence is relied upon is merely another
statement of the doctrine of reasonable doubt
as applied to circumstantial evidence."

. The case of Kassin vs. U. 5., (CCA5) 87 Fed.
(2nd) 183, 184, citing with approval on this point
the case of Paddock vs. U. S., supra, is particularly
in point.

The testimony of mailing, standing alone, and as
aided by the United States Attorney's interpretation
of it, leads to the conclusion that the Government

(114)

has not sustained the burden of proving, beyond a
reasonable doubt, that these defendants used the mails
to execute the schemes alleged in the indictment.
Accordingly, the motion to direct the verdicts should
have been granted.

CONCLUSION

More should not be said in view of the propor-
tions of the brief. Much more could be said, but we
respect the admonition that there must be a limita-
tion to errors assigned. The record contains many
errors not assigned, which we shall not point out.
A random inspection of the record will reveal them.

We hold in high esteem learned counsel who rep-
resented the Government below, but the record, as
we have pointed it out, justifies the assertion that
they looked more to gaining the verdicts than fin-
ally sustaining them.

Prejudicial errors, we think, have been demon-
strated, to the end that justice and right require
that they be corrected. Accordingtly, these defend-
ants respectfully urge:

First: That the order of the trial Court over-
ruling the special demurrers to the indictment for
duplicity be reversed, and the cause remanded with
directions to sustain the special demurrers.

Second: That, in the event the indictment is
sustained, then, because of the insufficiency of the
evidence to prove, beyond a reasonable doubt, that
these defendants mailed the indictment letters, and
the consequent error of the trial Court in refusing

(115)

to direct the verdicts for these defendants, that the
judgments be reversed with directions to dismiss the
cause (Vol. 2, R. C. L. p. 282, Sec. 237).

Third: That, in the alternative, the judgments
be reversed with directions to grant a retrial.

Respectfully submitted,

Leslie C. Hardy,

Attorney for Appellants , Jesse H, Shreve
and Archie C, Shreve

906 Luhrs Tower
Phoenix, Arizona.

George H. Shreve,

Washington Building,
Los Angeles, California.

Elliott, Hardy & Glenn,

906 Luhrs Tower
Phoenix, Arizona.

On the Brief,

APPENDIX

DEFENDANTS' OFFER OF PROOF

Defendants* offer of proof, which was filed with
the Clerk, after the trial court had refused to per-
mit the offer to be made, is as follows:

We now offer to prove by this witness that
a conversation took place at San Diego, Califor-
nia, during the summer or fall of 1931, at San
Diego, California, between Jesse H. Shreve, Glen
0. Perkins, John C. Hobbs and this witness A. C.
Shreve, at which time substantially the follow-
ing conversation was had:

Mr. Perkins stated that Security B & L was
having heavy demands for withdrawals by its
depositors and that the association was unable
to meet the demands; that it would be necessary
for them to borrow $50,000; that he wanted to
make arrangements in San Diego or somewhere
to borrow $50,000 for and on behalf of the Se-
curity B & L., Century Investment Trust and
Arizona Holding Corp. Jesse H. Shreve stated
that he was in no position to make the loan, that
he could not arrange such loan and did not know
of any place where such loan could be obtained.
Mr. Perkins then stated that he would like to
have some advice as to what course the building
and loan assn. could follow. A. C. Shreve stated
that unless they could meet the demands for with-
drawals or arrange for a loan to meet them, or

APPENDIX

make some satisfactory arrangements that it was
his opinion that they would be placed in the hands
of a receiver. Mr. Hobbs and Mr. Perkins stated
that they believed they could make the necessary
arrangements somewhere else, if we were unable
to assist them, and keep the business going and
finally meet the demand. At that conversation
A. C. Shreve asked if their minutes and books
of the meetings of Security B & L, Ariz. Hold.
Corp. and C. I. T. were up to date, to which Mr.
Perkins and Mr. Hobbs both replied that the books
of both offices were up to date; they also stated
that the minutes of meetings of the officers and
directors were up to date, as they had been kept
from the beginning of each Company (R. 791,
792).

Defendants offer to prove by this witness
that a conversation took place between Jesse H.
Shreve, Glen 0. Perkins and this witness, being
the only persons present, held early in December,
1929, in the office of the Security Building and
Loan Assn. and Century Investment Trust on the
ground floor of the Adams Hotel Building, on
Central Avenue in Phoenix, Arizona, substanti-
ally as follows:

Jesse H. Shreve stated that he was going to
withdraw from further participation in any man-
agement, control and operation of the Security
Building and Loan Assn., Century Investment
Trust and Arizona Holding Company; that he
would give a reasonable time, but not to exceed
two or three months, so that someone else could

APPENDIX a

take his place. Glen 0. Perkins stated that he
was sorry but that he would make arrangements
for someone to take over the interests of Jesse
H. Shreve a,nd Archie C. Shreve in those corpora-
tions; that he would arrange to relieve Jesse H.
Shreve and Archie C. Shreve of all further liabil-
ity for the operation, management and control
of the three companies; that he would be able to
make this arrangement wJthin not to exceed
ninety days. Jesse H. Shreve thereupon stated
that he thought that the deals pending for the
exchange of stock of Century Investment Trust
for stock of other corporations, particularly those
represented in San Diego, California, should be
rescinded. Mr. Perkins replied that such arrange-
ment would be agreeable to him and that he would
work the matter out. Mr. Perkins requested that
A. C. Shreve assist him from time to time for
two or three months in connection with the af-
fairs of the three corporations. A. C. Shreve stat-
ed that he would give some of his time to the
business, that part of his time would have to be
devoted to the affairs of the Overland Hotel and
Investment Company in connection with the Santa
Rita Hotel at Tucson, Arizona, and that part of
his time would be required in connection with his
employment and business at San Diego, Califor-
nia (R. 792, 793).

We offer to prove by this witness that a con-
versation took place between Daniel H. Shreve,
Jesse H. Shreve, Glen 0. Perkins, and this wit-
ness some time during the month of February,
1930, at San Diego, California, at which conver-

APPENDIX

sation no one else was present, which conversation
was substantially as follows:

Daniel H. Shreve stated that he had been to
Phoenix, Arizona, and looked into the affairs of
the Security Bldg. & Loan Assn., Century Invest-
ment Trust and Arizona Holding Corporation;
that he had concluded to purchase and take over
all of the interest of J. H. Shreve and A. C. Shreve
in those companies; that he in conjunction with
Glen 0. Perkins and Mr. Hobbs would assume
complete responsibility for the operation, man-
agement and control. Mr. Perkins stated that
such arrangement was satisfactory and agreeable
to him. J. H. Shreve and A. C. Shreve stated
that they had discussed the matter with them
and that they had transferred and delivered to
Daniel H. Shreve all of their stock in said cor-
poration (R. 793, 794).

We now offer to prove that there was a con-
versation held between Glen 0. Perkins, A. C.
Shreve and Jesse H. Shreve early in 1930, at
the office of the Security Building and Loan
Assn., Adams Hotel Bldg., Phoenix, Arizona, at
which time substantially the following conversa-
tion took place:

Mr. Perkins presented a printed circular bear-
ing a printed signature purporting to be a fac-
simile signature of J. H. Shreve, and stated that
that circular had been written and had been
printed by certain salesmen working under he,
Mr. Perkins. J. H. Shreve thereupon stated that

APPENDIX 6

the circular must not be circulated or distributed,
that is was wholly without his authority, that
he did not and would not approve of it, that he
had not authorized it, and would not permit it
to be criculated. J. H. Shreve further stated that
he had no connection with the operation, manage-
ment or control of the company and did not want
his name to be used in conection with it; that
he had formerly withdrawn from further partici-
pation in the affairs of the company, except in a
nominal capacity, awaiting Mr. Perkins' promise
to replace him on the board of directors and as
an officer of the companies, and that he was ex-
pecting him to carry out the promise which he
had made in December, 1929 (R.797, 798).

SUBDIVISION (c), RULE 43 OF RULES OF
CIVIL PROCEDURE FOR THE DISTRICT
COURTS OF THE UNITED STATES, ADOPTED
BY THE SUPREME COURT OF THE UNITED
STATES.

Rule 43 (EVIDENCE) (c) RECORD OF EX-
CLUDED EVIDENCE. In an action tried by a
jury, if an objection to a question propounded to
a witness is sustained by the court, the examing
attorney may make a specific offer of what he
expects to prove by the answer of the witness.
The court may require the offer to be made out
of the hearing of the jury. The court may add
such other or further statement as clearly shows
the character of the evidence, the form in which
it was offered, the objection made, and the rul-
ing thereon. In actions tried without a jury the

« APPENDIX

same procedure may be followed, except that the
court upon request shall take and report the evi-
dence in full, unless it clearly appears that the
evidence is not admissible on any ground or that
the witness is privileged.

ASSIGNMENT OF ERROR

XXV

The Court erred in admitting in evidence Govern-
ment's Exhibit 207, which was received in evidence
over the following objection and exception by coun-
sel for defendants:

''MR. HARDY: We object, because it ap-
pears to be addressed to Manuel K. King, and for
the further reason it is a printed pamphlet. The
true name of J. H. Shreve does not appear on here
as President of the Century Investment Trust,
but it is in sterotype form; it is not the original
signature.

MR. PETERSON : Identified by the witness
as being a facsimile signature.

MR. HARDY: Very well, that does not make
it an original signature, and the absence of some
proof that J. H. Shreve, the defendant here, knew
that this circular was mailed, or caused it to be
mailed; the mere fact that a fac-simile signa-
ture appears on there, we don't think is suffici-
ent to entitle it to be admitted in evidence. It is
hearsay. It is incompetent as to him.

THE COURT: It may be received.

APPENDIX 7

MR. HARDY: And another objection; the
mere fact that Mr. King took it from the post-
office is no proof it was mailed to him. There
has not been any proof it was mailed to him, and
in addition, it appears on the face of it that it
is not addressed to this witness.

THE COURT: It may be received.

MR. HARDY: Exception.''

The full substance of said exhibit is as follows:
An invitation of the Board of Directors of Century
Investment Trust, extended at the request of J. H.
Shreve to Manuel "K." King, disclosing J. H. Shreve
as President, San Diego, California, and mentioning
A. C. Shreve, Phoenix, Arizona, Vice-President and
Director and Officer of several financial institutions
of Arizona and California. The exhibit recites, among
other things, that Century Investment Trust owns
entirely, others in which it owns control, and others
in which it has a stock ownership. Security Building
and Loan Association, First National Bank of Pres-
cott, Arizona, Citizens State Bank, Phoenix, Arizona,
Arizona Holding Corporation, Phoenix, Arizona, Sun-
set Building and Loan Association, San Diego, Cali-
fornia, Commonwealth Building Company, San Di-
ego, California, United States National Bank, San
Diego, California, First National Bank, Oceanside,
California, Southwest Union Securities Corporation,
San Diego, California. The pamphlet or circular
further states that the present stock offering of Cen-
tury Investment Trust is to provide funds with which
to purchase under the present most favorable condi-
tions, additional banking institutions, building and
loan companies, seasoned securities which have a

,8 APPENDIX

long period of successful record, and every form of
profitable investment offering, to the end that Cen-
tury Investment Trust may be known as a giant
financial institution not only of ''Arizona for Ari-
zona" but of the ''West for the West." It further
recites that Century Investment Trust is a prosper-
ous, healthy and growing corporation. It invites the
addressee in the name of the Company and Board of
Directors to join the Company before the very early
advance in the price of stock of Century Investment
Trust. (R. 943).

SECTIONS 661 and 688, TITLE 28, USCA.

Section 661. COPIES OF DEPARTMENT
RECORDS AND PAPERS; ADMISSIBILITY.
Copies of any books, records, papers, or docu-
ments in any of the executive departments authen-
ticated under the seals of such departments, re-
spectively, shall be admitted in evidence equally
with the originals thereof. (R. S. Sec. 882).

Section 688. PROOFS OF RECORDS IN
OFFICES NOT PERTAINING TO COURTS.
All records and exemplifications of books, which
may be kept in any public office of any State or
Territory, or of any country subject to the juris-
diction of the United States, not appertaining to
a court, shall be proved or admitted in any court
or office in any other State or Territory, or in
any such country, by the attestation of the keeper
of the said records or books, and the seal of his
office annexed, if there be a seal, together with
a certificate of the presiding justice of the court

APPENDIX 9

of the county, parish, or district in which such
office may be kept, or of the governor, or secre-
tary of state, the chancellor or keeper of the great
seal, of the State, or Territory, or country, that
the said attestation is in due form, and by the
proper officers. If the said certificate is given
by the presiding justice of a court, it shall be
further authenticated by the clerk or prothono-
tary of the said court, who shall certify, under
his hand and the seal of his office, that the said
presiding justice is duly commissioned and quali-
fied; or, if given by such governor, secretary,
chancellor, or keeper of the great seal, it shall be
under the great seal of the State, Territory, or
country aforesaid in which it is made. And the
said records and exemplifications, so authenticat-
ed, shall have such faith and credit given to them
in every court and office within the United States
as they have by law or usage in the courts or
offices of the State, Territory, or country, as
aforesaid, from which they are taken. (R. S.
Sec. 906).

SECTION 4458, REVISED CODE OF ARI-
ZONA, 1928. Certified copies, under the hands
and official seals, if there be seals, by all state
and county officers of all documents properly
on file with such officers, shall be received in
evidence as the originals might be received. Ev-
ery written instrument, except promissory notes,
bills of exchange, and the last wills of deceased
persons, may be acknowledged as deeds are re-
quired to be acknowledged, and when so acknowl-
edged shall be received in evidence without other
proof of execution. (1745-6 R. S. '13, cons. & rev.)

30 APPENDIX

PROCLAMATION DECLARING ARIZONA
ADMITTED AS A STATE

By The President of the United States
of America.

A Proclamation.

February 14, 1912.

WHEREAS, the Congress of the United States
did by an Act approved on the twentieth day of
June, one thousand nine hundred and ten, au-
thorize the people of the Territory of Arizona to
form a Constitution and State government, and
provide for the admission of such State into the
Union on an equal footing with the original
States upon certain conditions in said Act speci-
fied; and

WHEREAS, said people did adopt a Consti-
tution and ask admission into the Union;

NOW, WHEREAS, the Congress of the Unit-
ed States did pass a joint resolution, which was
approved on the twenty-first doy af August, one
thousand nine hundred and eleven, for the ad-
mission of the State of Arizona into the Union,
which resolution required that, as a condition
precedent to the admission of said State, the
electors of Arizona should, at the time of the
holding of the State election as recited in said
resolution, vote upon and ratify and adopt an
amendment to Section One of Article VIII of
their State Constitution, which amendment was

APPENDIX 11

proposed and set forth at length in said resolu-
tion of Congress.

AND WHEREAS, it appears from informa-
tion laid before me that the first general State
election was held on the twelfth day of Decem-
ber, one thousand nine hundred and eleven, and
that the returns of said election upon said amend-
ment were made and canvassed as in section
seven of said resolution of Congress provided;

AND WHEREAS, it further appears from
information laid before me that a majority of
the legal votes cast at said election upon said
amendment were in favor thereof, and that the
governor of said Territory has by proclamation
declared the said amendment at part of the Con-
stitution of the proposed State of Arizona;

AND WHEREAS, the governor of Arizona
has certified to me the result of said election
upon said amendment and of the said general
election ;

AND WHEREAS, the conditions imposed by
the said Act of Congress approved on the twenti-
eth day of June, one thousand nine hundred and
ten, and by the said joint resolution of Congress
have been fully complied with;

NOW THEREFORE, I, WILLIAM HOW-
ARD TAFT, President of the United States of
America, do, in accordance with the provisions
of the Act of Congress and the joint resolution
of Congress herein named, declare and proclaim
the fact that the fundamental conditions imposed

12 APPENDIX

by Congress on the State of Arizona to entitle
that State to admission have been ratified and
accepted, and that the admission of the State into
the Union on an equal footing with the other
States is now complete.

IN TESTIMONY WHEREOF, I have here-
unto set my hand and caused the seal of the
United States to be affixed.

Done at the City of Washington this four-
teenth day of February, in the year of our Lord
one thousand nine hundred and twelve and of
the Independence of the United States of Amer-
ica the one hundred and thirty-sixth.

(Seal) WM. H. TAFT.

By the President:

HUNTINGTON WILSON,
Acting Secretary of State.

XX

The Court erred in admitting in evidence Gov-
ernment's Exhibit 71, which was received in evi-
dence over the following objection and exception
by counsel for defendants:

"MR. HARDY: Now, your Honor, we object
to the receipt of the books in evidence identified
as Government's Exhibit Nos. 71, 72, 73, 74, 75,

APPENDIX 18

77 and 78, for the reason that it appears from
the testimony of the witnesses for the Govern-
ment that the books and records embraced by
those exhibits marked for identification are not
books and records of original entry, and that
they are not the first permanent transaction, and
that these books and records reflect entries which
are transcribed from other tickets, documents or
memoranda. For the further reason that the
books and records as to the defendants an trial
are hearsay. They are secondary evidence and
not the best evidence of the transactions indi-
cated by the books. And for the further reason
it has not been shown that the defendants on
trial either directed, supervised or caused any of
the entries in those books to be made.

THE COURT: Overrule the objection.

MR. HARDY: Exception."

The full substance of said exhibit is as follows:
General Ledger Security Building and Loan Asso-
ciation, subdivided and marked Assets, Liabilities,
Capital, Income, Expense — Tucson Assets, Liabili-
ties, Revenues, Expenses. First item under Assets
dated Nov. 23, 1929, account secured by loans on real
estate, setting forth various accounts to various per-
sons, including W. H. Perry, A. W. York, Loan No.
37, Shumway Loans Nos. 36 and 44, Rayburn Loans
Nos. 26 and 27, York Loan No. 19, Dreyfus Loan
No. 41, Arrington Loans Nos. 39 and 42. Also sets
forth loans secured by stock of Association ; loans se-
cured by United States and Arizona bonds; Invest-
ment Certificates of Association and banks; Furni-
ture and Fixtures; Supplies — inventory; Prepaid in-

14 APPENDIX

surance; Items in process of Collection; Cash on
hand, first item dated Nov. 22, 1929; account with
Commercial National Bank, Phoenix, Arizona; ac-
count with Arizona Bank; Citizens State Bank; First
National Bank of Prescott; The Valley Bank, Mesa;
Bank of Chandler; Mesa Agency, Globe Agency;
Sunset Building and Loan Association, San Diego,
California, pass book No. 3756, first entry Nov. 22,
1929; Century Investment Trust, first entry Nov.
22, 1929; Century Investment Trust insurance ac-
count; Century Investment Trust clock account. Li-
abilities: Loans secured by real estate repaid, first
entry March 31, 1930; Investment Certificate pass-
book shares, first entry Nov. 22, 1929; Installment
Investment Certificates Class D, first entry May 10,
1930; Installment Investment Certificates Class E,
first entry March 25, 1930; Installment Investment
Certificates Class F, first entry April 10, 1930;
Income Certificates, first entry March 1. 1930; Full
Paid Investment Coupon Certificates Full Paid In-
vestment Non-Coupon Certificates; entries of Tucson
office Security Building and Loan Association; Notes
Payable, Notes Payable to Banks, Loans Real Estate
Incomplete, first entry Nov. 22, 1929, disclosing vari-
ous loans to various parties including Shumway loan
No. 38, Arrington Loan No. 39, York Loans Nos.
19 and 37, Rayburn Loans Nos. 26 and 27, Dreyfus
Loan No. 41, and Arrington Loan No. 42; Cash, first
entry Jan. 19, 1930; Escrow Account; Capital; Un-
divided Profits Dec. 31, 1930, $3,176.13 (red). Un-
divided Profits Dec. 31, 1931, $3,040.16, Profit and
Loss Dec. 31, 1930, $3,363.28 (red) ; Reserve Jan.
31, 1931, $135.97 (red) ; Profit and Loss Dec. 12,
1930, $187.15; Income, interest on loans, first item
Jan. 2, 1930; Interest other than loans, first item
Dec. 31, 1930; Profit and Loss Dec. 31, 1930, $1,-

APPENDIX 16

392.30 (red) ; Interest investments, real estate loans,
first item Jan. 29, 1931; Fees and commissions, first
item Dec. 31, 1929; fees on loans, first item Jan 31,
1931; Fees other than loans, first item May 31, 1930;
Expenses: salaries of officers, first entry Dec. 31,
1930; Legal fees and salaries, first item Jan. 24,
1930; Salaries employees, first item Jan. 22, 1931;
Various items including accounting and auditing
fees, agents commissions, rents, advertising and pub-
licity ,taxes and licenses, interest on notes payable,
interest on full-paid investment certificates, inter-
est on full-paid investment coupon certificates, in-
terest on full-paid interest non-coupon certificates,
interest on investment certificates pass-book, inter-
est on monthly income certificates, telephone and tele-
graph, sundry supplies and expenses, insurance, pos-
tage and stamped envelopes. Revenues, Expenses,
title expense, donations, flowers and trimming ex-
pense, automobile expense, travel expense, prepaid
insura.nce, accrued interest, Sundry supplies and ex-
pense, with notation "Items on this sheet transferred
to detail sheets on June 13, 1930, E. F. Y." Interest
on loans, interest on investments, fees on loans, other
fees, salaries other than officers, control account,
salaries other employees, control account, agents com-
missions and salaries, control account, legal fees and
salaries, control account, auditors fees, control ac-
count, rent, control account, advertising and public-
ity, control account, taxes and licenses, control ac-
count, income discounts, control account, interest on
notes payable, control account, interest on full-paid
certificates, control account, interest an pass-book
accounts, control account, interest paid on deposits,
control account, sundry interest paid, control account,
printing and stationery, control account, telephone
and telegraph, control account, sundry supplies and

-16 APPENDIX

expenses, control account, new accounts expense,
control account, insurance, control account, postage
and stamped envelopes, control account, revenue
stamps, control account, title expense, control ac-
count, donations, control account, flowers and trim-
mings, control account, automobile expense, control
account, travel expense, control account, bank service
expense, cash short, control account, interest on full-
paid investment certificates non-coupon, control ac-
count, expense account. Mesa Agency, control ac-
count, Arizona Bank control account, Expenses Ad-
vances, control account. Prepaid insurance control
account, accrued interest receivable control account,
escrow account control account. Tucson office: As-
sets: Loans, first entry April 19, 1929; loans secur-
ed by stock in Association, first entry 6-26-30. In-
vestment Certificates other building and loan asso-
ciations, furniture and fixtures, cash account, first
entry March 8, 1929; Arizona-Southwest Bank, first
entry March 22, 1929; Commercial National Bank,
first entry April 6, 1929; Consolidated National
Bank, first entry June 1, 1929; Old Dominion Bank,
first entry May 15, 1930; Phoenix office Security
Building and Loan Association, first entry Nov. 23,
1929; Bisbee Agency, first entry Dec. 30, 1930;
Sunset Building and Loan Association, first entry
May 1, 1930; Principal and interest (Overland Hotel
mortgage) $30,860.43; United States and Arizona
bonds owned. State Treas. March 8, 1929, $50,000.00;
Certificates of Account, first entry March 8, 1929;
First National Bank of Prescott, 5 entries of $10,000
each, same date; to State Treasurer $50,000. Items
in process of collection. Liabilities: Investment Cer-
tificates Account pass-book, first entry 3-8-29;
monthly income investment certificates, first entry
9-30-29; full-paid investment certificates, first en-

APPENDIX 17

try 1-3-29; Installment Investment Certificates Class
A, first entry 4-4-29 ; Installment Investment Certifi-
cates Class B, first entry 1-3-30; Installment Invest-
ment Certificates Class C. first entry 1-3-30; In-
stallment Investment Certificates Class D, first entry
3-28-30; Installment Investment Certificates Class
E, first entry 3-28-30; Installment Investment Cer-
tificates Class F, first entry 3-9-30; Full Paid In-
vestment Certificates, first entry 10-31-30; Interest
paid to Banks, first entry 6-25-30; Incomplete Loans,
first entry 7-18-30; Capital Stock Account, first en-
try 3-8-30; Undivided Profits Account, Capital Stock
Account, Capital Surplus, Undivided Profits, first en-
try 12-31-30, $455.70; Profit and Loss Account, first
entry 6-2-29; balance $1,513.65, Profit and Loss
Account, 12-31-30, Balance $456.70; Real Estate
loan repaid, first entry 5-1-30; Revenues: Interest
received account loans, first entry 1-4-30; fees on
loans, first entry 1-3-30; interest on investments
other than loans; first entry July 3, 1930; interest
on Sunset Building and Loan certificates, balance
$308.00; other fees, first entry 1-6-30; Expense ac-
count, first entry 4-13-29; Salaries other Officers,
first entry 6-9-30; Salaries other employees, first
entry 6-6-30; Agents commissions and salaries, first
entry Nov. 10, 1930; Auditing and accounting, first
entry 6-14-30; rent, first entry 7-14-30; Advertis-
ing and Publicity, first entry 6-9-30; Fees and Li-
censes, first entry 6-10-30; Interest on notes pay-
able, first entry 6-25-30; interest paid account —
full paid certificates, first entry 6-3-30; interest
paid account pass book certificates, first entry 1-3-30 ;
interest paid account pass book certificates, first
entry 6-3-31; interest other deposits, first entry Au-
gust 24, 1931; sundry interest paid, first entry
August 15, 1930, printing and stationery, first en-

18 APPENDIX

try 6-9-30; telephone and telegraph, first entry May
7, 1930; sundry supplies and expenses, first entry
1-7-30; new account expense, first entry 1-14-30;
insurance, first entry 5-20-30; postage and stamped
envelopes, first entry 1-29-30; title expense, first
entry Jan. 20, 1930; donations, first entry March
24, 1930; dues and subscriptions, first entry Dec.
3, 1930; flowers and trimming account, first entry
Dec. 31, 1931; travel expense, first entry 7-15-30;
a.utomobile expense, first entry 7-10-30; cash short,
first entry 1-20-31; interest on full paid investment
non-coupon certificates, first entry Nov. 1, 1930.
(R. 932).

SECTIONS 695 AND 695h, TITLE 28,
USCA.

Sec. 695. ADMISSIBILITY. In any court of
the United States and in any court established
by Act of Congress, any writing or record, wheth-
er in the form of an entry in a book or other-
wise, made as a memodandum or record of any
act, transaction, occurrence, or event, shall be
admissible as evidence of said act, transaction,
occurrence, or event, if it shall appear that it
was made in the regular course of any business,
and that it was the regular course of such busi-
ness to make such memorandum or record at the
time of such act, transaction, occurrence, or event
or within a reasonable time thereafter. All other
circumstances of the making of such writing or
record, including lack of personal knowledge by
the entrant or maker, may be shown to affect its
weight, but they shall not affect its admissibility.

APPENDIX 19

The term "business" shall include business, pro-
fession, occupation, and calling of every kind.
(June 20, 1936, c. 640, pp 1, 49 Stat. 1561).

Sec. 695h. PROSPECTIVE NATURE OF
SUBCHAPTER. Sections 695 to 695h of this title
shall be prospective only, and not retroactive.
(June 20, 1936, c. 640, pp 9, 49 Stat. 1564).

TESTIMONY OF GOVERNMENT'S WITNESS
WATT ON CROSS EXAMINATION, WITH REF-
ERENCE TO ASSIGNMENTS OF ERROR XVIII,
XIX AND XX, RELATING TO ADMISSIBILITY
OF BOOKS AND RECORDS OF ARIZONA HOLD-
ING CORPORATION, CENTURY INVESTMENT
TRUST AND SECURITY BUILDING AND LOAN
ASSOCIATION. (R. 344 to 354).

"I have identified Government's Exhibit 61
as the general ledger of the Century Investment
Trust. Ordinarily I kept it. I can not say that
there are not some entries in here made by some-
one else without a complete inspection of it. (The
witness inspected the book.) That is all entirely
in my handwriting. It is not the first book of
entry recording these transactions; that is a gen-
eral ledger of the Century Investment Trust. I
worked on those books during June of 1930. The
entry dated October 30, 1929, was made before I
went to work for the corporation. I made that
entry.

Q. From what information did you make
that entry?

20 APPENDIX

A. Well, I rewrote the books of the Century
Investment Trust from whatever information I
could get the necessary information from — from
whatever source, I should say.

Q. You rewrote all of the books of the Cen-
tury Investment Trust? J

A. Not entirely, no.

The witness continuing: The three books, or
parts of them, which I rewrote, are Government's
Exhibit 63 for identification, which is the jour-
nal voucher of Century Investment Trust, Gov-
ernment's Exhibit 62 for identification, which is
a book marked ''Century Investment Trust," and
Government's Exhibit 61 for identification, which
is marked ''General Ledger Century Investment
Trust."

Q. And at whose direction did you rewrite
those books?

A. D. H. Shreve.

Q. You mean Daniel H. Shreve?

A. Yes, sir.

Q. And what information did you have, or
what records did you have from which you re-
wrote those books?

A. Had the old books, deposits in the Secur-
ity Building and Loan, and the bank deposit slip^.
I believe, and check stubs, cancelled checks and

APPENDIX 21

what other — what information I could get from
Mr. Shreve regarding certain transactions which
were not clear of themselves.

Q. When you say ^'Mr. Shreve" you mean
Daniel H. Shreve?

A. Yes, sir, as I previously testified.

The witness continuing: To a great extent
I relied upon information I found myself in order
to rewrite these books. I do not know where the
books and records are from which I rewrote
these books. I know what I did with them after
I completed rewriting the books. The old pages
were put there in the office in one of the files,
and I don't know whatever happened to them.

Q. Well, then, these books which have now
testified about are not books of original entry?

A. Well, I think that is asking for an opin-
ion on my part.

Q. Well, they were not originally — they were
not made by you from information that came to
you direct; they were made from information
made by someone else, were they not, or records
or entries made by someone else?

A. Yes, sir.

Q. Did you make the original entries from
which these books were rewritten?

22 APPENDIX

A. Do you mean like check-stubs or deposit
slips?

Q. From whatever source you got this in-
formation, did you make the original entries?

A. No, sir.

Q. You did not?

A. No, sir.

Q. Do you know who made them?

A. I don't know.

Q. Well, now, did you copy some of those
books in Exhibits 63 and 61 and 62 from other
books?

A. From the other books.
Q. From other books?

A. Yes, sir. Some of the entries probably
are the same as they were in the old book, but
there were many transactions that were not re-
corded or were not recorded properly in the old
books.

Q. And those which you thought were im-
properly recorded in the old books you recorded,
made new entries of those in these books?

A. Yes, sir.

i

APPENDIX 23

Q. And that you did on your own respon-
sibility?

A. No, sir.

Q. At whose direction?

A. Daniel H. Shreve.

Q. Daniel H. Shreve?

A. Yes, sir.

Q. Did either J. H. Shreve or A. C. Shreve
ever request you or counsel with you in the re-
writing of those books?

A. Not that I recall.

Q. And the information which you got to
rewrite these books, you don't know whether it
was correct or not, do you, Mr. Watt?

A. No, I have no way of knowing of my own
personal knowledge.

Q. You were just taking what somebody else
had said?

A. I believed it to be correct.

Q. You merely believed it to be correct?

A. Yes, sir.

The witness continuing: I did not rewrite

24 APPENDIX

any books of the Security Building and Loan Asso-
ciation, except trace entries in the Building and
Loan books which pertained to the Century In-
vestment Trust or the Arizona Holding Corpora-
tion. I traced them from the rewritten books of
the Century Investment Trust. I did not re-
write any books of the Arizona Holding Corpora-
tion. This was in June, 1930. I am referring to.
There had been no entries made in the books of
the Arizona Holding Corporation since Novem-
ber 4th or 5th, 1929. I opened a set of books
and brought those up to date.

Q. Where did you get the information from
which you brought those books up to date?

A. From the same sources I got the other
information: Deposit slips and check stubs, can-
celled checks, deposits in the Building and Loan.

Q. And those were records and documents
made by someone else?

A. Yes, sir.

Q. And you don't know whether they were
correct or not?

A. Not of my own knowledge.

Q. Yes. And who directed you to make those
entries about which you have testified in the Ari-
zona Holding Company books?

A. D. H. Shreve.

APPENDIX 25

Q. You mean Daniel H. Shreve?

A. Yes, sir.

Q. Did J. H. Shreve or A. C. Shreve give
you any directions with respect to those books?

A. Not that I recall

The v^^itness continuing : I can select the books
of the Arizona Holding Company with respect
to which I made those entries. I refer to Gov-
ernment's Exhibit 70, 69, 68, 65, 66 and 67 for
identification. Some entries in exhibits numbered
69 and 70 of the Arizona Holding Company are
reflected from the rewritten books of the Century
Investment Trust, because there were some trans-
actions that ran through the three compaies; had
to give them proper effect in the books of these
two corporations. These rewritten entries in the
Century Investment Trust had a bearing there-
after upon the books of the Security Building and
Loan Association; they had a bearing before that
time, if I understand your question correctly. It
was not necessary to make any changes in the
books of the Security Building and Loan Associa-
tion because of the rewriting of the books of the
Century Investment Trust. I did not rewrite
any of the books of the Security Building and
Loan Association.

Government's Exhibits 61 and 68 for identi-
fication, inclusive, are books and records of the
Century Investment Trust. Those books and rec-
ords contain entries of transactions which hap-
pened after October 24, 1931. I think that is

26 APPENDIX

true. They do with the possible exception of the
insurance accounts receivable and the policy regis-
ter is not here. I can't answer that definitely
without inspecting the entries. They all contain
entries subsequent to October 24, 1931. Govern-
ment's Exhibits 67 and 70 for identification con-
tain entries of transactions which happened af-
ter October 24, 1931. They contain a number
of such entries. Some entries in Government's
Exhibits 61 to 70 for identification, inclusive,
are not made by me. Some of them were made
by Miss E. F. Young. I think Mrs. Harrington
and Miss Harrison may have. Miss Goudy wrote
insurance policies and the copy of the bill which
was filed here in the insurance accounts receiv-
able, whether it was made out by her on the
typewriter at the time — not in her handwriting.
They were made out by her on the typewriter
and that record was transferred into this books,
being Government's Exhibit 64 for identification.
I probably inserted those records myself. Other
than that I did not make the entries which went
into the book. I would say, offhand, there are
about four handwriting altogether in those books,
including myself. I can identify some of this
handwriting. Miss Young and I made entries
in these books and one or two of the entries are
in a handwriting I am not familiar with. I know
it is neither the handwriting of Miss Young or
myself. There are two handwritings in these
books with which I am not familiar. That ap-
plies only to the books of the Century Investment
Trust. I believe the books of the Arizona Hold-
ing Corporation, Government's Exhibits 69 and
70 for identification, are entirely in my own hand-
writing, with the exception of one five dollar

APPENDIX 27

credit which I mentioned the other day, an ac-
count of James Gammell, and some pencil nota-
tions which do not affect the balance. I do not
know who made the item which is not in my
handwriting. Some of the entries of transactions
in the books identified as Government's Exhibits
61 to 70 inclusive were of transactions which oc-
curred prior to the time I went to work for the
Century Investment Trust or the Arizona Hold-
ing Corporation. The first date of such transac-
tion set up in the books of the Century Invest-
ment Trust is October 30, 1929, and I was not
working for the Century Investment Trust at
that time, but I made that entry in Government's
Exhibit 63 for identification. I presume I got
that information from the Articles of Incorpora-
tion. That was made setting up the capital
stock, and states so on the voucher. Referring to
Government's Exhibit 62 for identification, which
is a book of the Century Investment Trust, and
to the page under the subdivision of the Commer-
cial National Bank, No. 102-1, the dates of those
transactions are November 20th and on down to
December 5th, 1929. I was not connected with
the Century Investment Trust at that time. I
knew nothing about these transactions except
from information I could gather from original
sources or from any other information. Mr. Dan
Shreve knew about some items. I don't know
that he did back this far but the check stubs in
most cases would indicate what the charge was
to be on the item.

Q. The items appearing on that page which
were made by you are not the original entries
of those transactions?

28 APPENDIX

A. No, I presume they were not.

Q. They were transcribed by you into that
record from other entries, or documents, or rec-
ords?

A. Yes, sir.

Q. Or from informtion which you gathered
from place to place?

A. Yes, sir.

The witness continuing: Those are original
entries in the books of the Arizona Holding Cor-
poration, being Government's Exhibits 69 and
70 for identification. There have not been any
bookkeeping entries made from about November
4th or 5th, 1929, until about June, 1930. Some
of those entries in those Arizona Holding Corpora-
tion books were based upon or made from entries
which then existed in the books of the Century
Investment Trust. At the time I became associat-
ed with the Arizona Holding Corporation no en-
tries had been made in those books of that cor-
poration for several months prior thereto.

Q. And what did you do with those books?

A. I brought them up to date.

A. From the original sources of informa-
tion wherever I could find it, deposit slips, de-
positors in the Building and Loan, check stubs.

APPENDIX 29

Q. Were those deposit slips, check stubs and
other data made by you?

A. No, sir.

Q. Made by someone else?

A. Yes, sir.

Q. By whom?

A. I could not answer that now. (R. 344
to 352).

* * *

RE-DIRECT EXAMINATION

MR. PETERSON: Q. Mr. Watt, in making
the entries in the exhibits of the Century Invest-
ment Trust and the Arizona Holding Company,
were those entries made from the original sources
the same as if all the entries had been made
when the transactions occurred, and in the regu-
lar course of business?

MR. HARDY: Well, your Honor, we ob-
ject to that, because it calls for a conclusion of
the witness and because he has already testified
from what sources the entries were made.

THE COURT: He may answer.

MR. HARDY: Exception.

THE WITNESS: They were made in that
way, yes, sir." (R. 354).

30 APPENDIX

EVIDENCE OF MAILING INDICTMENT
LETTERS

COUNT ONE— Letter addressed to Fred Sweet-
land. With respect to this letter Government's wit-
ness Hobbs testified:

"That is my signature on Government's Ex-
hibit 159 for identification.

Q. Was that letter mailed in the regular
course of business of the Security Building and
Loan Association?

MR. HARDY: We object to that, your Hon-
or, it is incompetent, irrelevant and immaterial,
in the regular course of business, and leading.

THE COURT: He may answer.

MR, HARDY: Exception.

THE WITNESS: Yes, this letter Vv^as mail-
ed in the regular course of business.

The witness continuing: Government's Ex-
hibit 159 for identification is signed by me as
Vice-President and Secretary of the Building
and Loan Association. I don't know that I actu-
ally mailed the letter myself. Someone in the
office mailed it. I don't recall the details. It is
a form letter. I am not certain that the form
was prepared or attached by me. The letter ap-
parently was dictated by m.e to Mrs. Fricke and
signed by me. / could not say as to J. H. Shreve
or Archie Shreve assisting in the preparation or

APPENDIX 31

the mailing of the letter. Sometimes these form
letters came to us in a box or group and we sim-
ply mailed them out from Tucson. Sometimes we
copied the letter, the letter that was sent us, and
mailed them out from there. It would indicate
I dictated this letter myself." (R. 573, 574).

COUNT TWO— Letter addressed to 0. Hohen-
stein. With respect to this letter Government's wit-
ness Watt testified:

''I signed the slip enclosure in the envelope
marked Government's Exhibit 161 for identifi-
cation. That enclosure was mailed in that en-
velope in the general course of business of the
Security Building and Loan Association.

MR. HARDY : We object to that, your Hon-
or. There is not sufficient proof of the mailing.

THE COURT : Well, he may answer.

THE WITNESS: Yes, sir; it was.

The witness continuing : I recall making that
slip myself, and that is my signature upon it.

MR. PETERSON: We offer Government's
Exhibit 161 in evidence.

MR. HARDY: (On voir dire examination)
Government's Exhibit 161 for identification is a
duplicate slip. It is all in my handwriting. I do
not know that I addressed the envelope. It is
typewritten, I could not tell. Neither of these
defendants had anything to do directly with the

32 APPENDIX

preparation or mailing of Exhibit 161 for iden-
tification. This is the ordinary form of deposit
slip which was mailed out to depositors of the
Security Building & Loan Association." (R. 603).

COUNT THREE— Letter addressed to Henry
Baker. With respect to this letter Government's
witness Shumway testified:

''MR. PETERSON: I will hand you Gov-
ernment's Exhibit 166, being an envelope, and
167 for identification, particularly calling your
attention to Government's Exhibit 167, being the
letter, and ask you if any letters of tlmt type
were mailed from the Mesa office?

MR. HARDY : We object to that, your Hon-
or. It calls for a conclusion of the witness when
he asked if letters of that type were bing mailed
out of the Mesa office.

THE COURT: He may answer.

MR. HARDY: Exception.

THE WITNESS: Yes, sir.

The witness continuing: Those letters were
mailed in the regular course of business from the
office of the Security Building and Loan Asso-
ciation." (R. 719, 720).

COUNT FOUR — Letter addressed to Wesley
Palmer. With respect to this letter Government's
witness Perkins testified:

APPENDIX 33

"The letters which are Government's Exhibits

161 and 162 for identification, were mailed out
in the regular course of business. It was the cus-
torn to mail those dividend letters out.

MR. PETERSON: I offer in evidence Gov-
ernment's Exhibit 161 and 162 for identification,
which is the letter testified to by Mr. Wesley
Palmer, that he received this through the United
States Mail.

MR. HARDY: Object to its receipt in evi-
dence— their receipt in evidence upon the ground
no proper foundation has been laid for its ad-
mission.

THE COURT: It may be received.

MR. HARDY: Exception.

MR. FLYNN: Just a minute, I think we
have got the wrong numbers on that exhibit.

THE CLERK: This exhibit you offered is

162 and 163?

MR. PETERSON : I ask an order that that
be changed.

THE CLERK: Exhibits should be 162 and
163 instead of 161 and 162." (R. 624, 625).

COUNT FIVE— Letter addressed to R. R. Guth-
rie. With respect to this letter Government's witness
Hobbs testified:

34 APPENDIX

"Q. (Mr. Peterson) : I hand you Government's
Exhibit for identification 164 and ask you what
the custom in mailing out those letters ivas, and
if you recognize the signature on that letter?

MR. HARDY : Just a moment, we would like
to see the exhibit before he answers. With ref-
erence to this Government's Exhibit 164 for iden-
tification, Mr. Peterson, you are now asking Mr.
Hobbs what the custom was in regard to mail-
ing it out?

MR. PETERSON: Yes, sir; mailing letters
of that type out.

MR. HARDY: We object, first, because the
letter is not in evidence, therefore, no testimony
with respect to a custom concerning the letter is
now admissible, and the additional reason that a
custom is irrelevant, incompetent and immaterial.

THE COURT: He may answer.

MR. HARDY: Exception.

The witness continuing: In the case of these
dividend letters, I think they were generally pre-
pared in the Phoenix office and mailed to us in
a batch, and we addressed them to the proper
people and mailed them out to our stockholders
in Tucson. Sometimes those letters were signed
when they left Phoenix, sometimes I signed them
down there. I recognize the signature upon the
exhibit I hold in my hand. It is the signature
of D. H. Shreve. I don't recall Mr. Shreve sign-
ing those letters in the Tucson office.

APPENDIX 35

Q. Was it the custom to receive those letters
signed by Mr. Shreve in Phoenix and then mailed
out of your office?

MR. HARDY: We object to the question, as
to the custom. It is irrelevant, immaterial and
no foundation has been laid for the custom.

THE COURT: He may answer.

MR. HARDY: Exception.

The witness continuing: Stockholders' let-
ters were mailed from Phoenix and were usually
signed in Phoenix and we simply addressed the
envelopes in the Tucson office and put them in
the mail there. Government's Exhibit 164 for
identification, which I hold in my hand, is the
class of letters I have just testfied in regard to."
(R. 577, 578).

COUNT SIX— Letter addressed to 0. H. Robson
and Mary Robson. With respect to this letter Gov-
ernment's witness Perkins testified:

^That is my signature upon form letter be-
ing Government's Exhibit 165 for identification.

Q. Was that mailed out in the general course
of the business of the Century Investment Trust?

A. We mailed out — yes, sir; those letters
were mailed out, yes, sir.

MR. PETERSON : I offer Government's Ex-
hibit 165 for identification in evidence, being a

36 APPENDIX

letter which Mr. 0. H. Robson testified he re-
ceived through the United States mail.

MR. HARDY: Government's Exhibit 165
for identification, your Honor, purports on the
face of it is addressed to 0. H. Robson and Mary
Robson. It is the position of the defendants that
there isn't sufficient proof as yet to show that
those were received through the mails by either
of those persons. There is no positive testimony
from Robson in that respect, and Maiy Robson,
another addressee in the letter, has not testified.
There is no proper foundation laid yet.

THE COURT: It would not have to be re-
ceived if it were deposited in the mail, would it?

MR. HARDY: Well, I should think the let-
ter would have to be received, yes.

THE COURT: It may be received." (R. 623,
625).

COUNT SEVEN— Letter addressed to Helen
Hannon. With respect to this letter Government's
witness Perkins testified:

"The letter which is Government's Exhibit
173 for identification was a form letter mailed
out in the regular course of business.

MR. PETERSON : I offer at this time Gov-
ernment's Exhibit 173 for identification, being a
letter testified to by Mrs. Helen Hannon as hav-
ing been received through the United States Mail
— Helen Maynard.

APPENDIX S7

MR. HARDY : Object to the receipt of Gov-
ernment's Exhibit 173 in evidence, upon the
grounds no proper foundation has been laid for
its admission.

THE COURT: It may be received.

MR. HARDY: Exception." (R. 626, 627).

COUNT EIGHT— Letter addressed to Harry
Nelson and Anna B. Nelson. (Exhibit 168 and 169,
R. 583, 584). With respect to this letter Government's
witness Hobbs testified:

"Government's Exhibit 179 for identification
is the same type of letter, is one of the dividend
letters which I testified in regard to. D. H.
Shreve's signature is on that letter. Government's
Exhibit 181 for identification, being a letter, and
182, is one of the type of form letter I have
testifed in regard to. Government's Exhibit 183
for identification, being a letter, and 184, being
an envelope, is the type of dividend letters which
I have testified in regard ot.

THE CLERK: You have 182, which was
just marked for identification, is the same as 169
which has been heretofore marked for identifica-
tion, and 184 which was just marked for identi-
fication is the same as 168 which has heretofore
been marked for identification. 183 and 184 will
not be assigned as any more exhibits. There was
some testimony about 183 and 184, so we can't
assign those numbers to any other exhibits." (R.
578, 579).

B8 APPENDIX

COUNT NINE— Letter addressed to Alice H.
Davis. With respect to this letter Government's wit-
ness Perkins testified:

*'I recognize my signature upon the letter and
envelope being Government's Exhibits 205 and
206 for identification. That letter was mailed
in the regular course of business of the Security
Building and Loan Association. I remember dic-
tating the letter to the secretary; I signed it and
told her to mail it." (R. 652).

COUNT TEN— Letter addressed to Lulu Gatlin.
(Exhibits 179, 180, 181, R. 709, 710). With respect
to this letter Government's witness Hobbs testified:

''Government's Exhibit 179 for identification
is the same type of letter, is one of the dividend
letters which I testified in regard to. D. H.
Shreve's signature is on that letter. Government's
Exhibit 181 for identification, being a letter, and
182, is one of the type of form letters I have tes-
tified in regard to." (R. 578, 579).

COUNT ELEVEN— Letter addressed to Lulu
Gatlin. (Testimony with regard to the letter set forth
in this count is the same as testimony in Count Ten,
supra.

In addition to the foregoing. Government's wit-
ness Hobbs, on cross examination , testified as fol-
lows:

*7 know that D. H. Shreve came over the

early part of 1930 and took over the conduct of

the SecuHty Building & Loan Association, and

APPENDIX 89

also the other two companies, Arizona Holding
Corporation and Century Investment Trust, and
from that time on the business affairs of those
corporations ivere discussed and transacted in the
main between me and D, H. Shreve. As far as I
was concerned D. H. Shreve became the active
head of the business v^hen he came over in the
early part of the spring of 1930. As far as I v^as
concerned I was in charge of the affairs and the
business of the Tucson office, and I took my in-
structions thenceforth from D. H. Shreve. Govern-
ment's Exhibit 164 for identification is signed by
D. H. Shreve, meaning Daniel H. Shreve. That is
D. H. Shreve's signature on that letter. It is a form
for mimeographed letter. It was the custom for
Dan Shreve to send form letters from the Phoe-
nix office for mailing from the Tucson office.
I do not know who actually mailed this letter
which is marked Government's Exhibit 164 for
identification. It was just mailed in the ordin-
ary course of business of the Century Investment
Trust at Tucson. I don't believe that form was
available to any person upon the counter of the
company at Tucson. I do not actually know who
mailed this letter marked Government's Exhibit
164 for identification. I know it was the custom
to mail that type of letter from the Tucson office.
As a rule Mrs. Fricke took care of our mail
there; that is the actual mechanical handling of
it. J. H. Shreve and A. C. Shreve didn't da the
mailing down there. I know that Government's
Exhibit 164 is the type of letter that was mailed
from the Tucson office. Government's Exhibit
179 for identification is a letter signed by D. H.
Shreve, and also Government's Exhibit 191 for
identification. They are form letters and it was

40 APPENDIX

the practice to mail them to me at Tucson from
the Phoenix office, and then in turn the Tuc-
son office would mail these letters out to whom-
soever they were addressed. I don't know per-
sonally whether either of these letters identified
as Government's Exhibits 179 to 181 for identi-
fication were ever mailed from the Tucson office.
Government's Exhibit 183 for identification is a
letter signed by Glen 0. Perkins. He was the
same person I testified came over to Arizona and
participated in the organization of the Arizona
Holding Corporation with Mr. James, Dr. Thomas
and Dr. Morris. That is his signature upon let-
ter marked Government's Exhibit 183 for ideni-
fication. That letter apparently was mailed from
Tucson. The envelope has a Tucson post mark.
I do not know personally who mailed that letter.
I do not know the exact time D. H. Shreve came
here but I do know that after he came, as far
as I was concerned, he was in charge of the com-
pany, and that would be up to the time the com-
panies closed. I have no way of fixing the time
that Dan Shreve came over. The only way I could
fix it was in the order of sequence in which the
various Mr. Shreves were in Arizona. Jesse was
the first one, Archie was the next one and Dan
was the last one." (R. 580, 581, 582).

No. 8781

IN THE

(Hxxtvdt OInurt ^f ^pp^ab

^0r ti\t ^inil\ Ctr^utt

JESSE H. SHREVE and ARCHIE C. SHREVE,

AppellantSy
vs.

UNITED STATES OF AMERICA,

Appellee.

Upon Appeal from the District Court of the United States
for the District of Arizona

BRIEF FOR APPELLEE

F. E. Flynn,

United States Attorney.

K. Berry Peterson,

Assistant United States Attorney.

Attorneys for Appellee.

•tM« mmtrma ao«

nrr ^ IQ^^P

INDEX

Page
ARGUMENT 2

FIRST: — Assignment of Error I:

The question of duplicity of Indictment 2

SECOND: — Assignment of Error II:

The question of sufficiency of bill of particulars.... 3

THIRD :— Assignment of Error XXIV:

Alleged error in permitting witness Fierstone to
testify as to transactions occuring after the last
date of any indictment letter 5

FOURTH:— Assignments of Error III, IV, VI, XXXV,
VII and XXV:

All based on the Court's ruling sustaining objec-
tions to question asked Archie Shreve relating to
certain conversations with defendant Jesse Shreve
and witnesses Glen 0. Perkins and John Hobbs... . 6

FIFTH:— Assignments of Error VIII, IX, X, XI and

xn.

All relating to the admission in evidence of exem-
plified copies of deeds, mortgages and assignments
of mortgages 15

SIXTH:— Assignments of Error XVIII, XIX and XX:
Relating to the admission in evidence of the books
and records of the corporations named in the
indictment .— 16

SEVENTH:— Assignment of Error XXIII:

Relating to tne testimony of Government witness
Fierstone with respect to an audit made by him
of the books of the Century Investment Trust 18

EIGHTH:— Assignments of Error XIII, XIV, XV and

XVI:

Relating to the admission in eviaence of certain
books and records of the First National Bank,
Prescott, Arizona 19

NINTH:— Assignments of Error XXI and XXII:
Relating to the testimony of Government witness
Schroeder with respect to his audit of the books
of the corporations named in the indictment 22

Page

TENTH:— Assignments of Error XXVI and XXVII:
Assignment of Error XXVI based upon the admis-
sion in evidence of Government Exhibit 170, being

an exempHfied copy of a real estate mortgage 23

Assignment of Error XXVII based upon the ad-
mission in evidence of Government's Exhibit 172,
being an exemplified copy of Sheriff's deed 23

ELEVENTH:— Assignment of Error XXVIII:

Relating to testimony of Government witness A.
W. York 25

TWELFTH:— Assignment of Error XXIX:

Relating to ruling of the Court sustaining objec-
tions to questions asked A, W. Crane, accountant
testifying in behalf of appellants 26

THIRTEENTH :— Assignments of Error XXXII and

XXXIII:

Assignment of Error XXXII relates to the Court's
instruction to the jury to the effect that a with-
drawal from the scheme could not be effected by

intent alone but by some affirmative action 27

FOURTEENTH:— Assignment of Error XXXIV:

Relating to the Court's denial of appellants' mo-
tion for instructed verdict 28

CONCLUSION 31

OPENING STATEMENT 1

TABLE OF CASES

Page

Barrett v. United States, 33 F. (2d) 115 17, 21

Butler V. United States, 53 F. (2d) 800 17, 21

Ciafirdini v. United States, 266 Fed. 471 4

Cochran v. United States, 41 F. (2d) 193 15

Cowl V. United States, 35 F. (2d) 794 3

Dunlop V. United States, 165 U. S. 486 4

Foster v. United States, 178 Fed. 165 21

Havener v. United States, 49 F. (2d) 196 15

Horn V. United States, 182 Fed. 721 3

Levinson v. United States, 5 F. (2d) 567 15

Page

Lewis V. United States, 38 F. (2d) 406 18

Little V. United States, 73 F. (2d) 861 5

Mclntyre v. United States, 49 F. (2d) 769 15

Myres v. United States, 256 Fed. 779 16

Rosen v. United States, 161 U. S. 29 4

Samuels v. United States, 232 Fed. 536 5

Schwartzberg v. United States, 241 Fed. 348 29

Silkworth v. United States, 10 F. (2d) 711 29

Wilson V. United States, 190 Fed. 427 29

Wong Tai v. United States, 273 U. S. 77 4

STATUTES AND TEXT BOOKS CITED

16 C. J. Section 1265, p. 636 13

18 U. S. C. A. 556 3

28 U. S. C. A. 688 16

Wigmore on Evidence, Sec. 2119 13

DISCUSSION APPELLANTS' CITATIONS

Beck V. United States, 33 F. (2d) 107 30

Bogk V. Gassert, 149 U. S. 17 12

Carver v. United States, 164 U. S. 694 12

Freeman v. United States, 20 F. (2d) 748 30

Kettenbach v. United States, 202 Fed. 377 4

Perrin v. United States, 169 Fed. 17 12

Shreve v. United States, 77 F. (2d) 2 17

No. 8781

IN THE

(^xxtnit Olourt ttl ^pp^b

JESSE H. SHREVE and ARCHIE C. SHREVE,

AppellantSy
vs,

UNITED STATES OF AMERICA,

Appellee.

Upon Appeal from the District Court of the United States
for the District of Arizona

BRIEF FOR APPELLEE

OPENING STATEMENT

We do not believe that appellants' brief contains
sufficient statement of the facts or the evidence to
enable the Court to properly determine all of the
questions raised. However, rather than set forth
the statement of the facts which the Government*

•Appellee is referred to as "Government" throughout this brief.

(I)

(2)

contends is necessary, we will take up the appellents'
argument in the order that it appears in their brief
and, where it becomes necessary, we will quote from
the record in order to properly present the Govern-
ment's theory.

ARGUMENT

FIRST

The first argument advanced by appellants covers
Assignment of Error I. Appellants contend that the
indictment was duplicitous because of certain allega-
tions in the first count (Appellants' Brief, p. 13).
Appellants argue that the word ^'hereinafter", as
used in the indictment, refers not only to the subse-
quent portions of the count in which it is used but
also to all subsequent counts. It is clear from the
reading of the indictment as a whole that the word
''hereinafter" as used in the first count refers only
to the letters and representations affecting the scheme
and artifice set out in the first count and repeated
in the second and third counts of the indictment.
After alleging in the second paragraph of the indict-
ment that the defendants had devised and intended
to devise a scheme, etc., and after naming the vic-
tims, Sweetland, Hohenstein and Baker, the para-
graph concludes with this phrase, "which said scheme
and artifice was substantially as follows" (2)*.

Does not this definitely and clearly advise the
defendants that the misrepresentations immediately
thereinafter set forth were made in connection with

♦Unless otherwise indicated, figures in parentheses refer to pages
of the printed transcript of record.

(3)

the scheme and artifice mentioned in paragraph two
of the indictment?

The same is true of the letters set out in the
first three counts of the indictment. Each letter is
preceded by an allegation as follows: "Having de-
vised and intended to devise said scheme and arti-
fice as aforesaid, the defendants, for the purpose
of executing said scheme and artifice did * * * place
and cause to be placed in the United States Post
Office * * * a certain letter" (6, 10, 12). This
allegation is followed by setting the letters out in
full. When we read this last allegation in connec-
tion with the allegations complained of by appellants,
there can be no misunderstanding as to what the
word "hereinafter" refers to.

As is said in the Government's brief in the form-
er appeal, the construction suggested by appellants
is strange, unnatural and absolutely unsound. The
defect, if any, is one of form only and should be
disregarded.

18 U. S. C. 556.

Cowl V. United States, 35 F. (2d) 794-798.

Horn V. United States, 182 Fed. 721-726.

SECOND

The second division of appellants' argument cov-
ers Assignment of Error II (Appellants' Brief, p.
14). Appellants contend that the bill of particulars
furnished by the Government prior to the trial,

(4)

which was the third trial of the case, was evasive,
uncertain and incomplete. No where in their brief
do appellants point out how or in what manner they
were prejudiced by the ruling of the trial court. To
suggest that appellants could be prejudiced by the
failure to furnish any particulars whatever for the
third trial of the case, would be to indulge in a fic-
tion too unreasonable to be given serious considera-
tion by any court.

Ciafirdini v. United States, 266 Fed. 471.

A bill of particulars was furnished. The trial
judge, in his discretion, determined that the Gov-
ernment had sufficiently complied with the order
for a bill of particulars. Without a more specific
and definite showing of prejudice than appears in
the record in this case, this assignment should be
promptly disposed of. The authorities cited in our
brief in the former appeal are particularly appli-
cable where there has been a prior trial and the
trial court is satisfied with the bill furnished.

Wong Tax v. United States, 273 U. S. 77-82.

Dunlop V. United States, 165 U. S. 486-491.

Rosen v. United States, 161 U. S. 29-35.

Appellants cite decision of this Court in support
of their contention — Kettenbach v. United States^ 202
Fed. 377. We are willing to have the Court apply
the principles laid down in the Kettenbach case to
the present case.

I

(5)

THIRD

This division of appellants argument is based
upon Assignment of Error XXIV (Appellants' Brief,
p. 16). Appellants contend that the Court erred in
permitting witness Fierstone, a Government account-
ant, to testify that stock in the Security Building
and Loan Association held by the Century Invest-
ment Trust Corporation valued at $99,457.50, was
charged off as a loss on December 16, 1931. Ap-
pellants' argument is based upon two grounds, first,
the transaction occurred after the last date of any
indictment letter; second, that the transaction oc-
curred subsequent to the date any scheme was exe-
cuted as fixed by the bill of particulars. The Court
instructed the jury that evidence relating to trans-
actions after October 24, 1931, would only be con-
sidered for the purpose of determining intent (876).
There was no exception taken to this instruction.
The instruction is a correct statement of the law.
The evidence objected to was properly admitted for
the purpose of showing intent.

Stern v. United States, 223 Fed. 762-764.
Little V. United States, 73 F. (2d) 861-867.
Samuels v. United States, 232 Fed. 536-542.

In the case of Stern v. United States, supra, it
appears that after appellants were arrested they
effected the sale of property mentioned in one of
the counts of the indictment. The Court said this
was a fact for the consideration of the jury.

The second ground advanced in support of this

(6)

assignment is without merit for the same reasons
set forth herein in discussing the first ground, name-
ly, that acts of the defendants and circumstances
after the commission of the crime, frequently point
more conclusively and unerringly to the guilt of
those accused than do their prior acts. The authori-
ties last above cited support the ruling of the trial
court.

Appellants contend that the Guardian Western
Company is not mentioned in the indictment or bill
of particulars and, therefore, according to their
theory, its name could not even be mentioned at the
trial. The Guardian Western Company had nothing
whatever to do with the transactions covered by the
testimony. The witness' testimony was based upon
the books and records of the Century Investment
Trust and the Arizona Holding Company, both of
which companies were mentioned in the indictment
and bill of particulars and the books of both com-
panies were in evidence. The defendants were suf-
ficiently advised by both the indictment and bill of
particulars that they would be required to meet tes-
timony touching upon the contents of those books.

FOURTH

Under this division appellants have grouped As-
signments of Error III, IV, V, VI, XXXV, VII and
XXV (Appellants' Brief, ps. 20-40). They are all
based upon the Court's rulings sustaining objections
to questions asked defendant Archie Shreve relat-
ing to certain conversations. In order to properly
present this matter to the Court, we deem it neces-
sary to refer to that part of the record containing

(7)

the conversations to which the Government witnesses
Perkins and Hobbs testified. In this connection we
do not feel that it is necessary to set out in this
brief any conversations except the ones where the
defendant Archie Shreve was present, as he is the
only witness offered in behalf of the defendants in
regard to such conversations.

The only conversations testified to on direct ex-
amination by the witness Perkins is found in the
record on pages 615, 616, 621, 622 and 623. No
where in any of this testimony does it appear that
the defendant Archie Shreve was present at any of
these conversations. Testimony set out in appel-
lants' brief (30-31) was part of the cross-examina-
tion of the witness Perkins (641-642). We do not
believe that the able counsel for appellants means
to seriously contend conversations can be opened up
on cross-examination and then be used as the basis
for introducing self-serving statements of the de-
fendants.

Even in the cross-examination set out in the brief
i the witness definitely stated, "Mr. Whitney and Mr.
Osborne were not discussed in the conversations in
San Diego at v/hich Jesse Shreve, Archie Shreve,
John Hobbs and myself were present in Jesse Shreve's
home." All that the Government testimony amount-
: ed to was that the witness did have a conversation
! with defendant Jesse Shreve in regard to the liqui-
dation of the company and there was no attempt
to detail what was said.

I The same is true of the testimony of witness
: Hobbs, set out in the brief (Appellants' Brief, ps.

(8)

31-33). He mentions only the subject of the con-
versation and did not attempt to detail what was
said. Keeping in mind the testimony of Perkins
and Hobbs in regard to these conversations, let us
now consider the assignments of error based upon
the Court's refusal to permit defendant Archie Shreve
to testify as to certain conversations between those
witnesses and the defendants.

Assignment of Error III (Appellants' Brief, ps.
20-23) :

An effort was made to have defendant Archie
Shreve testify as to what was said in the conversa-
tion between Jesse Shreve, Perkins and the witness
which occurred "at or about the time the Century
Investment Trust and Security Building and Loan
Association opened offices in Phoenix." No attempt
was made to identify this conversation with any con-
versation Perkins had testified to. Therefore, even
under the defendants' theory, no proper foundation
was laid for its admission. This was a very appar-
ent attempt on the part of the defendants to prove
a defense by introducing self-serving declarations
about conditions and transactions instead of prov-
ing the conditions and transactions by proper direct
and competent evidence. The purpose of the off-
ered testimony is made clear by counsel's own state-
ment: "MR. HARDY: It is not laid for the pur-
pose of impeachment. The question was asked and
predicated in regard to future business of the Cen-
tury Investment Trust and the Arizona Holding
Corporation'' {763). No claim was made by coun-
sel at the time that the evidence was offered for
the purpose of clearing up and explaining a conver-

(9)

sation the witness Perkins had testified about.

Assignment of Error IV (Appellants Brief, ps.
23-25) :

The statement in appellants' brief shows that
the witness Archie Shreve was permitted to testify
that there was a conversation between the parties
named and that the conversation was with reference
to the affairs of the Security Building and Loan
Association. That was all that Hobbs had testified
to (389-390).

The offer of proof found in appellants' brief
(Appendix, ps. 1-2), contains a statement of what
defendants expected to prove in regard to this con-
versation. This offer in evidence is not materially
different from the testimony of the witness Hobbs
except that it details what was said. The purpose
of the Government's evidence was not to prove what
was said, but merely to prove that Hobbs and Per-
kins did go to San Diego to consult with the de-
fendants about the affairs of the different companies.
These facts are admitted both by the testimony of
the defendant Archie Shreve and by the offered proof.
The exclusion of the offered evidence could not have
possibly prejudiced appellants.

Assignment of Error V (Appellants' Brief, ps.
25-26) :

It is contended under this assignment that the
Court refused to permit the defendants to make an
offer of proof with regard to the excluded testi-
mony concerning the conversations referred to in

(10)

Assignments of Error III and IV. The Court did
give appellants permission to make such an offer.
The Court merely refused to permit them to make
the offer in the presence of the jury and instructed
counsel to write it out (912). We would like to say
at this time, in connection with this offer as well
as in connection with all the offers which are set
out in the appendix to appellants' brief, that the
Court never ruled on any such offers. This omis-
sion of the ruling on the part of the Court was
due, perhaps, to the fact that appellants failed to
ask for such a ruling. We do not believe that any
litigant should be permitted to file a written offer
of proof with the Clerk and then, without asking
the Court to rule upon such offer, assign the failure
of the Court to rule as error.

Assignment of Error VI (Appellants' Brief, ps.
26-28) :

This is such a clear example of a self-serving
statement that it seems unnecessary to devote a great
deal of time and space to discuss it. There is no
claim by appellants that there was any testimony
in behalf of the Government in which the conversa-
tion offered in evidence was mentioned. The offer
of proof (Appendix, Appellants' Brief, ps. 4-5) clear-
ly discloses the self-serving nature of the offered
evidence. The appellants have offered no possible
theory under which it might be admissible.

The offered testimony was in regard to the
alleged conversation between the defendants and the
witness Perkins concerning Government's Exhibit
207. No conversation having been testified to by

(11)

any of the Government's witnesses, this was just an
attempt to put in defensive matter by way of self-
serving statements in place of putting the defend-
ant Jesse Shreve on the stand to testify directly re-
garding his connection with the exhibit in question
(798, 821).

Assignment of Error XXXV (Appellants' Brief,
p. 28) :

Appellants attempted to have the defendant Ar-
chie Shreve testify in regard to a conversation be-
tween Jesse Shreve, Perkins and the witness, which
the witness claimed took place in San Diego, Cali-
fornia, in February, 1930. Appellants failed to
point out the part of the record where there is any
testimony on the part of the Government concern-
ing any such conversation. We have searched the
record and have failed to find any such testimony
on the part of the Government. Therefore, under
appellants own theory, the evidence is inadmissible,
there having been no proper foundation laid for its
introduction.

Assignment of Error VII (Appellents' Brief, p.
29):

This assignment is based upon the alleged re-
fusal of the Court to permit appellants to make an
offer of proof concerning the conversation referred
to in Assignment of Error VI. The alleged con-
versation was with reference to Government's Ex-
hibit 207. The assignment is without merit, first,
because the Government introduced no evidence in
regard to any such conversation ; second, because the

(12)

Court did not refuse permission to make the offer;
third, the offer was made in writing and filed with
the Clerk, Appellants failed to ask for any ruling
upon this offer and the Court made none.

In the case of Carver v. United States, 164 U. S.
694, cited by appellants, the evidence excluded con-
cerned a conversation which was not only part of the
res gestae but a Government witness had testfied
to details of the conversation. In addition, the con-
versation was between the defendant and the deceas-
ed, whom he was accused of killing. In the present
case, the conversations were all between co-schem-
ers who were accused jointly of devising and intend-
ing to devise a scheme to defraud.

The case of Bogk v. Gassert, 149 U. S. 17, cit-
ed by appellants, was a civil case in which one of
the parties was permitted by the Court to testi-
fy in regard to the conversation had at the time of
the execution of certain written instruments. The
defendant then was denied the right to give his
version of the transaction gathered from the same
conversation. The situation in the present case is
entirely different and we cannot see where the de-
cision in the Bogk case supra has any application.

In the case of Perrin v. United States, 169 Fed.
17, the excluded evidence was documentary and was
all part of the same transaction. We wish to call
the Court's attention to the authorities cited in
Judge Gilbert's dissenting opinion :

'*It follows from the general principle that
distinct or separate utterance is not receiv-

(13)

able under this principle. The boundary line
here is usually defined by saying that all that
was uttered at the same time on the same
subject is receivable." (Wigmore on Evidence,
Section 2119).

In the present case we contend that, in many of
the instances complained of, there was no testimony
on the part of the Government where the conversa-
tions referred to by the witness for the defense was
even mentioned. In the instance where those con-
versations had been mentioned by the Government
witness, the conversation itself was not repeated
and all the Government's evidence brought out was
the fact that there had been a conversation about
the affairs of the corporation involved. The wit-
ness for the defendants was permitted to go as far
in his testimony as were the witnesses for the Gov-
ernment. Under the law as stated in the above
quotation from Wigmore this was all appellants
were entitled to do.

In this connection, we think it appropriate at
this time to complete the quotation from Corpus
Juris, the first part of which is set out in appel-
lants' brief (p. 33) :

a* * * rpj^gy ^j,g excluded not because they
might never contribute to the ascertainment
of the truth, but because if received they
would most commonly consist of falsehoods
fabricated for the occasion, and would mis-
lead oftener than they would enlighten." (16
C. J. 1265, page, 636.)

We quote the foregoing because we believe it ex-

(14)

plains the reason why defendants in a criminal
case should not be permitted to go beyond the bound-
ary line mentioned in the above quotation from
Wigmore.

This is particularly true in the present case
where the appellant, Jesse Shreve, did not take the
stand and subject himself to cross-examination. An
effort was made to introduce these self-serving state-
ments of Jesse Shreve through the testimony of a
co-defendant who claims to have overheard the state-
ments. This testimony was not offered for the pur-
pose of proving there had been a conversation, the
main purpose being to prove the truth of the self-
serving statements.

Assignment of Error XXV (Appellants' Brief,
p. 38):

This assignment is based upon the admission in
evidence of Government's Exhibit 207 (943). This
exhibit was identified by Perkins (653), and also
by Government's witness, Manuel J. King (722).
Manuel J. King identified the exhibit as one he re-
ceived through the mails at Tucson, Arizona, when
he was getting dividends from the company. The
objections to the exhibit are set out in the record
and will not be repeated here (723). It was not
necessary to have direct evidence that Jesse Shreve
deposited this instrument in the mail himself. We
believe the above testimony was sufficient to prove
the exhibit was mailed out by the Century Invest-
ment Trust. During all the time of this company's
existence it had the same offices as the Arizona
Holding Corporation, Phoenix, Arizona (258), and

(15)

at all times was under the direction of some one of
those charged in the indictment. We think the evi-
dence as a whole clearly shows that Jesse Shreve,
Archie Shreve, Dan Shreve, Glen Perkins, John
Hobbs and J. G. Cash all had a part in devising
and carrying out the scheme set out in the indict-
ment. There is evidence that the appellant Archie
Shreve was for a time in actual charge of the Phoe-
nix office. When he was not in charge, Dan Shreve
or Glen Perkins, both of whom are proven co-schem-
ers, were in charge and there is also evidence that
at all times Jesse Shreve was in fact the man in
control of the management and had the last say in
connection with the affairs of all the companies.
All of this is sufficient to justify the introduction
of Government's Exhibit 207.

Levinson v. United States, 5 F. (2d) 567.
Mclnttjre v. United States, 49 F. (2d) 769.
Havener v. United States, 49 F. (2d) 196.
Cochran v. United States, 41 F. (2d) 193.

FIFTH

Assignments of Error VIII, IX, X, XI and XII
(Appellants' Brief, ps. 41-45) :

All of the assignments in this group relate to
the admission in evidence of exemplified copies of
deeds, mortgages and assignments of mortgages, as
evidence on behalf of the Government. The ob-
jection to these exhibits is that exemplified copies
were not admissible because the Government failed

(16)

to prove the originals were not available. The Act
of Congress definitely settles the question raised by
these assignments.

28 U.S.C.A. 688 (and citations thereunder).

Appellants contend that that section applies only
to foreign records. The last sentence of the sec-
tion contradicts appellants' contention in this re-
gard. If we follow appellants' construction of this
section, we then have the anomalous situation of one
rule of evidence as to records of the state where
the Federal Court is sitting and a more liberal rule
as to records of another state.

Appellants' theory is not supported by any of
the authorities cited under Section 688 supra. On
the contrary, they hold opposite to appellants' theory.

Myres v. United States, 256 Fed. 779-782.

SIXTH

Assignments of Error XVIII, XIX and XX (Ap-
pellants' Brief, ps. 59-62) :

These assignments are based upon the admis-
sion in evidence of the books and records of the
corporations named in the indictment. We disa-
gree with some of the conclusions appellants have
drawn from the testimony in the case. In the
first place, the witness Watt testified that he did
not rewrite any of the books of the Security Build-
ing and Loan Association (347). This is the only
company involved in the first three counts of the
indictment. The witness also stated that he did not
rewrite any books of the Arizona Holding Corpora-

(17)

tion, but merely brought some of them up to date
(348). He further testified that it was not neces-
sary to make any changes in the books of the Se-
curity Building and Loan Association (349). He
further testified that the entries made by him in
the books of the Century Investment Trust and the
Arizona Holding Corporation were all made from
the original sources (354). In other words, the
books were kept in the regular order of business.

If appellants' position is correct and the books
and records were not admissible in evidence, they
were made inadmissible by the acts and omissions
of appellants themselves. To make accused persons
benefactors of their own irregularities, would be to
announce a dangerous principle of law. Defendants
in criminal cases are now surrounded by ample pro-
tection without enlarging that protection to the ex-
tent asked for by appellants.

The evidence concerning the books was practi-
cally identical with the evidence at the prior trial
and this same question was raised on appeal and
this Court passed upon it in its former opinion.
Shreve v. United States, 77 F. (2d) 2, 7. The quo-
tation from the opinion contained in appellants' brief
settles this question contrary to appellants' conten-
tion (Appellants' Brief, p. 64). The authorities in
support of the admissibility of books and the cir-
cumstances in this case are unlimited.

Butler V. United States, 53 F. (2d) 800, 806.

Barrett v. United States, 33 F. (2d) 115.

(18)

The former opinion in this case was not the first
time this Court had announced such a rule.

Lewis V. United States, 38 F. (2d) 406, 414.

The opinion in the Shreve case, supra, became the
law of this case and controls the actions of counsel
and the rulings of the Court in the subsequent trial.
The books of the Security Building and Loan Asso-
ciation were properly admitted in evidence in proof
of the first three counts and the books of the Cen-
tury Investment Trust and the Arizona Holding
Corporation were properly admitted in evidence in
proof of the remaining counts.

SEVENTH

Assignment of Error XXIII (Appellants' Brief,
p. 67):

This assignment is based on the testimony of
Fierstone with reference to an audit of the books
of the Century Investment Trust, and error is claim-
ed solely upon the ground that the books themselves
were not properly in evidence.

Our answer to appellants' sixth argument is also
an answer to this assignment. In the brief, however,
(Appellants' Brief, p. 66), appellants precede their
argument on this assignment with the statement
that the testimony of Fierstone based upon his audit
of the books of the Security Building and Loan Asso-
ciation and the Arizona Holding Corporation was
also erroneously admitted. While we feel that the
former opinion is decisive of that question, we want

(19)

to again call the Court's attention to the fact that
the appellants' complaint of the books of the Cen-
tury Investment Trust and the Arizona Holding
Corporation does not apply to the books of the Se-
curity Building and Loan Association.

EIGHTH

Assignments of Error XIII, XIV, XV and XVI
(Appellants' Brief, ps. 68-73):

These assignments are based upon the admission
in evidence of certain books and records of the First
National Bank of Prescott, Arizona, being Govern-
ment's Exhibits 84, 90, 92, 93 and 94.

Assignment of Error XIII (Appellants' Brief,
p. 68) :

This assignment has to do with the admission
in evidence of Government's Exhibit 84, consisting of
the daily statement showing the condition of the
First National Bank of Prescott. This exhibit is
a part of the bookkeeping system of the bank and
one of the permanent records. Witness Trott testi-
fied he made the record himself and that the en-
tries were correct (298, 299, 300).

There is nothing on the face of this exhibit or
in the record anywhere that shows how it could
possibly be prejudicial. The appellants in their
brief have failed to point out how any prejudice
could arise from the introduction of this exhibit.
So, under the well-settled rule that harmless error
will not be considered, there can be no merit to
this assignment, whatever view we take.

(20)

Assignment of Error XIV (Appellants' Brief,
p. 70):

This assignment refers to Government's Exhibit
90. The witness Evans testified that payment for
the certificates of deposit was delivered to him.
At the time of the making of the bank record, which
is Exhibit 90, the witness was in sole charge of the
management of the bank. He testified that the item
was a correct record of the transaction (308). In
spite of his testimony on cross-examination, this
was the first entry of this transaction. There un-
doubtedly were other entries in the books of the
bank showing the various steps in the history of
this $20,000, but the item in question is the rec-
orded history of one of those steps and, as to that
fact, must, of necessity, be an original and a per-
manent record thereof.

Assignment of Error XV (Appellants' Brief,
p. 71):

This assignment refers to Exhibits 92, 93 and
94. The same witness, Evans, testified in regard
to the entries included in these exhibits; that they
were made by him and that they were correct rec-
ords of the transaction which they purported to
record (311). In connection with this witness' state-
ment on voir dire examination (312), to the effect
that these items were secondary and auxiliary rec-
ords, it must be apparent, even from the cold record
in this case, that throughout his testimony this wit-
ness was attempting to shield the appellants. The
items referred to were not secondary or auxiliary
records. They were, in fact, not only the first per-

(21)

manent records of these particular transactions but
they were, in our opinion, the only permanent rec-
ords thereof. Evans, on further questioning, stated
that the entry he referred to on voir dire was one
of the steps of the complete record and that Exhibit
91 was the first record (313). In other words, it
was a record of the first step in the transaction.
The entries in Exhibits 92 to 94, inclusive, were
introduced in evidence to show the subsequent steps
in this transaction and without a record of these
steps there would be no complete record of the trans-
action. Even if we were to apply the strict and
stringent interpretation of the opinions of this Court
which appellants have given them, we have met that
requirement and the foundation for the introduc-
tion of the records was complete.

Barrett v. United States, 33 F. (2d) 115.

Butler V. United States, 53 F. (2d) 800.

Foster v. United States, 178 Fed. 165.

In Barrett v. United States, supra, the Court, in
discussing the fact that the books were offered as
proof, said:

"If the books, properly identified, assist
in proving that fact they are admissible wheth-
er Barrett knew of the books or not."

And, quoting from Butler v. United States, supra :

"Books of account are often received to
prove a material fact where the party has no

(22)

connection with the books or the business re-
flected by them."

NINTH

Assignments of Error XXI and XXII (Appellants'
Brief, ps. 81-83) :

Assignment of Error XXI has to do with testi-
mony of Government witness Schroeder, which tes-
timony wa.s based upon his audit of the books of
the three companies named in the indictment.

Assignment of Error XXII is based upon the
Court's failure to strike his testimony referred to
in Assignment of Error XXI.

The only objection to the testimony was that it
was based upon an audit of books other than those
in evidence. This is also the grounds of the motion
to strike.

We submit that appellants have placed an erron-
eous construction upon the testimony and, therefore,
necessarily have drawn a wrong conclusion. Every
question asked the witness in reference to his audit
confined him to the books in evidence (657-658).
The witness himself stated at the very outset "the
audit I made and which I will testify in regard to,
is made on the books now in evidence in this case
and based upon those alone." (657).

It is true the witness testified in regard to ex-
amination of other records and public documents
(Appellants' Brief, ps. 84-86), but he very definitely

(23)

stated that nothing in any of such records entered
into his audit as testified to (687). Undoubtedly in
the auditing of a set of books of any corporation,
an auditor might search through the books of many
other companies or through the entire record in some
public office. Let us assume that in all of such
search, he failed to find a single item that had any
connection or reference to the company whose books
he was auditing. Would it be necessary to bring into
court every book and record that the auditor ex-
amined and searched through before he could testify
as to his audit? Ridiculous as this proposition sounds,
it seems to us to be the position appellants have
taken. Starting with a false premise and necessar-
ily coming to a wrong conclusion, the authorites cit-
ed in support of appellants' contention are not ap-
plicable to the true facts in this case.

TENTH

Assignments of Error XXVI and XXVII (Ap-
pellants' Brief, ps. 87-89) :

Assignment of Error XXVI is based upon the
admission in evidence of Government's Exhibit 170
(946).

Assignment of Error XXVII is based upon ad-
mission in evidence of Government's Exhibit 172
(947).

Exhibit 170 is a real estate mortgage dated April
16, 1930, from one Perry to Yavapai County Sav-
ings Bank, on property located in Yavapai County
(548).

(24)

Exhibit 172 is a Sheriffs deed dated May 3, 1933,
of the same property to the Yavapai County Savings
Bank, issued in pursuance of a foreclosure of Ex-
hibit 170.

Appellants have missed the purpose for which
these exhibits were introduced in evidence. It was
not for the purpose of showing that 'title had been
received by reason of the deed from Blackburn,
dated June 26, 1930 (Gov. Ex. 144) (517), the
Perry mortgage would in no way prevent Blackburn
from having and conveying title two months after the
Perry mortgage was executed.

The purpose of this evidence was to show that
on July 14, 1930, when the property was deeded to
A. E. Reyburn (Gov. Ex. 141) (512), and she exe-
cuted a mortgage back for $8700, and that on July
21, 1930, when this Reyburn mortgage was assigned
to the Security Building and Loan Association (Gov.
Ex. 143) (516), the Reyburn mortgage was not a
first mortgage as represented by the appellants.

Schroeder testified (576) that the Reyburn loan
was included in the figures $193,929.46, found in
Government's Exhibit 160 (659). The Perry mort-
gage executed in April, 1930, and not finally fore-
closed until the Sheriffs deed in May, 1933, must
have been a prior lien to that of the Reyburn mort-
gage. Furthermore, the loan was in excess of the
value of the property. Russell testified that in 1930
the property was worth $6,000 (551). Further evi-
dence that this mortgage was fraudulent is the fact
that Reyburn, the mortgagor, was used merely as
a dummy for the entire transaction (513).

(25)

Authorities cited in appellants' brief, in support
of their argument that the Sheriff's deed was not
admissible, are not applicable. The law that you can-
not prove the facts upon which a judgment was
rendered by mere proof of the judgment as against
a third party is, we concede, well settled, but it is
also well settled that a judgment is evidence of its
rendition and the authorities quoted from in appel-
lants' brief (p. 92) so state.

ELEVENTH

Assignment of Error XXVIII (Appellants' Brief,
p. 94) :

This assignment is based upon the testimony of
the witness A. W. York. The answers of the wit-
ness are all set out in appellants' brief and we will
not repeat them in full. The first answer on page
94 of the brief merely states the witness had re-
ceived a letter from his daughter about a proposi-
tion the company she worked for had to make. This
was only a preliminary explanation on the part of
the witness. There is nothing harmful or prejudi-
cial in it.

The first part of his second answer (Appellants'
Brief, p. 95) is identical with the first answer. We
quote the last part of the answer:

"The purpose as I later on understood was
for me to come over here and take charge of
a ranch in the vicinity of Holbrook." (948).

This does not purport to be a statement of any-

(26)

thing his daughter said. It may well be that the
understanding of the witness was based on conver-
sations with appellants. This quoted part of the
answer was not responsive and on a proper motion
could have been stricken. No such motion was made.

In view of the overwhelming proof of the guilt
of the defendants, this assignment is, in our opin-
ion, frivolous, in spite of appellants vigorous and
sincere plea for the preservation of salutary stand-
ards of law. We supplement appellants' plea by
asking that justice be done in this case.

TWELFTH

Assignment of Error XXIX (Appellant's Brief,
p. 97):

This assignment is based on the Court's sustain-
ing an objection to a question asked witness Crane,
who was an accountant testifying on behalf of ap-
pellants. The question asked the witness was not
sufficiently broad or comprehensive to meet the re-
quirements of a hypothetical question. It left too
much to the imagination of the witness. We assume
that the nature of the business, the exact relations
between the Holding Company and the subsidiary
would be elements that would have to be taken into
consideration. A second question as to whether a
certain manner of accounting is approved by the
Internal Revenue Bureau of the United States is
clearly improper. The system of accounting ap-
proved by the Internal Revenue Bureau for income
tax purposes would have no possible bearing on this
case. Even assuming that the method of having

(27)

the expense items of the Security Building and Loan
Association paid by the Century Investment Trust,
as testified to by Fierstone (Appellants' Brief, ps.
98-100), was the correct method of accounting, the
Government had the right to show, as it did by
Fierstone's testimony, the difference such a system
would make in the showing of profit, in order for
the jury to determine whether or not the represen-
tations made by the appellants were misleading.

THIRTEENTH

Assignments of Error XXXII and XXXIII (Ap-
pellants' Brief, ps. 103-104) :

These two assignments have to do with the Court's
instructions.

Assignment of Error XXXII (Appellants' Brief,
p. 103) :

The Court properly instructed the jury that a
withdrawal from a scheme could not be effected by
intent alone, but that there must be some affirma-
tive action. Defendants' exception was on the ground
that the Court should have defined what would con-
stitute an affirmative act. The authorities cited
by appellants (Appellants' Brief, p. 106), to the ef-
fect that the Court should explain the meaning of
a technical or legal term occurring in the instruc-
tions, are not in point for the reason that the term
"affirmative act" is neither a legal nor a technical
term. This instruction was easily understood and
easily applied. Any juror should be able to dis-
itinguish between intent and action. The use of

(28)

the word "intent" makes the meaning of the words
"affirmative action" plain. A definition is unneces-
sary. If the Court undertook to tell the jury just
what acts would be necessary to effect a withdrawal,
it would have necessitated an analysis of almost the
entire evidence in the case. Appellants might have
had a meritorious complaint in that event. Whether
the appellants withdrew from the schemes or when
they withdrew were questions of fact for the jury
to determine.

Assignment of Error XXXIII (Appellants' Brief,
p. 104) :

Appellants complain because the Court refused
to instruct the jury that there was no evidence the
appellants made any representations that the Secur-
ity Building and Loan Association had a paid-in
capital stock of $300,000, as alleged in the indict-
ment.

Again we say that it was for the jury to de-
termine what charges had or had not been proved.
The jury was fully instructed that the indictment
was not to be considered as evidence (855-856).
This was all that was necessary to protect the rights
of the appellants. We must assume that the jury
followed the instructions of the Court. The Court
also instructed the jury that the Government need
not prove all of its allegations, only enough to prove
the guilt of the defendants (868).

FOURTEENTH

Assignment of Error XXXIV (Appellants' Brief,

f (29)

p. 107):

This assignment is based upon the Court's denial
of appellants' motion for an instructed verdict. In
their brief appellants abandon all grounds upon
I which this motion is based, except as to the suffi-
ciency of the evidence to connect the appellants with
mailing the indictment letters.

I Appellants make much of the fact that counsel
: for the Government remarked that it had not been
shown that the witness Archie Shreve had knowledge
"where or how or who prepared this" (referring to
the indictment letters). This position of the Govern-
ment counsel was justified, the witness stating that
he never heard of any of the letters or knew any-
thing about them or had anything to do with them,
etc. (796).

We know of no principle of law in connection
' with cases of this kind that is so well established
as the one that each one of the schemers need not
participate in every act done in the furtherance of
a scheme. He may not know what his partners are
doing, but he is bound by their acts.

Silkworth v. United States, 10 F. (2d) 711.

Schwartzberg v. United States, 241 Fed. 348.

Wilson V. United States, 190 Fed. 427.

Appellants concede that it had been established
by the evidence, (1) that it was a business custom
to mail the letters; (2) that the letters were mailed
in the general or regular course of business (Apel-
lants' Brief, p. 111).

(30)

We claim that in addition to the above facts, we
have also complied with the rules stated in Freeman
V. United States, 20 F. (2d) 748, which is cited in
appellants' brief, to the effect that the custom of
mailing was the appellants'. It is clearly proven
that Jesse Shreve was the actual head of the com-
pany. He placed men in charge of the different
offices. Therefore, anything done by these men was
under the authority of Jesse Shreve and he is bound.
This is particularly true where the men in charge are
proven to be co-schemers such as Dan and Archie
Shreve and Glen Perkins, and we believe that this
could also include John Hobbs and J. G. Cash. As
was said in the Beck case, 33 F. (2d) 107, cited
in appellants' brief (p. 109) :

"That the mails were used is clear. That
the defendant Beck is bound if Barrett used
the mails in the ordinary course is not open
to serious dispute. The law does not now re-
quire an intent to use the mails as part of the
scheme, as formerly. It is sufficient if they
are used. Beck placed Barrett in the position
of general manager of the corporation, leav-
ing to him the direct management of the busi-
ness w^hile Beck primarily looked after his own
business."

In the Beck case, however, there was no evidence
of Barrett's connection with the mailing.

The testimony set out in appellants' brief, (ps.
30-40) does not contain all of the evidence connect-
ing the appellants with the mailing of the indict-
ment letters. We believe, however, it is sufficient

(31)

to prove their connection therewith. Many of the
letters were signed by Perkins or Dan Shreve and
mailed out under their direction. In order to get
all the evidence of appellants' connection with the
mailing, it is necessary to read the entire testimony
of Perkins. We particularly refer to the following
places in the record, pages 615, 616, 621, 622, 623,
635 and 636.

Referring to Jesse Shreve, Perkins said:

*'We knew him as the boss, he was the
man who directed us * * * (636). * * * The
orders for the Tucson office came from the

j Phoenix office. * * * it came from J. H.
Shreve or Archie Shreve or when Dan Shreve

I was here." (636).

AVithout repeating it, we wish to call the Court's
attention to the entire testimony of Perkins found
)n page 637 of the record. There is further testi-
nony in the record on the question of mailing, which
ve will not quote (638, 639, 652).

CONCLUSION

. We submit that there is ample evidence connect-
ng the appellants, and each of them, with the mail-
ng of the indictment letters.

Having discussed all the issues raised by the ap-
pellants, we respectfully submit that, because of the
Overwhelming proof of appellants' guilt and the lack

(32)

of any prejudicial error, the judgment should be
affirmed.

Respectfully submitted,

F. E. Flynn,

United States Attorney.

K. Berry Peterson,

Assistant United States Attorney.

Attorneys for Appellee.

IN THE 3

(Hvctxxii OInurt nf ^pprals

JIfnr tilt ^miii Chroitt

UNITED STATES OF AMERICA,

Plaintiff and Appellee ^
vs.

JESSE H. SHREVE, ARCHIE C. I ^^ 070^

SHREVE, DANIEL H. SHREVE, ^ ^^^' ®'^
GLEN 0. PERKINS, and
W. C. EVANS,

Defendants and Appellants.

REPLY BRIEF OF APPELLANTS

JESSE H. SHREVE and ARCHIE C. SHREVE

Leslie C. Hardy,

Attorney for Appellants y

Jesse H, Shreve and Archie C. Shreve,

605 Title & Trust BuUdlng
Phoenix, Arizona

George H. Shreve,

Washington Building,
Los Angeles, California

On the Brief.

INDEX

TABLE OF CASES

Page
Atchison, T. & S. F. Ry. Co., 65 Sowers, 213 U. S.,
55, 29 Sup. Ct. Rep. 397, 53 L. Ed. 695 10

Ciafirdini vs. U. S., 266 Fed. 471 5

Coulston vs. U. S. (CCAIO) 51 Fed. (2nd) 178 3

Creel vs. U. S. (CCA81) 21 Fed. (2nd) 690 4

Dunlop vs. U. S., 165 Fed. 486 5

Greenbaum vs. U. S., 80 Fed. (2nd) 113 13

Hills vs. U. S. (CCA9) 97 Fed. (2nd) 710 8

Myres vs. U. S., 256 Fed. 779 10

Osborne vs. U. S.. 17 Fed. (2nd) 246 13, 14

Pabst Brewing Co. vs. E, Clemens Horst Co.,

229 Fed. 913 13

Rosen vs. U. S., 161 U. S. 29 5

Shreve vs. U. S., 77 Fed. (2nd) 2 5, 13, 14

Wilkes vs. U. S., 80 Fed (2nd) 289 12, 14

Wong Tai vs. U. S., 273 U. S. 77 5

Young vs. Sou. Pac. Ry. Co., 182 Cal. 369, 190 Pac. 36 19

TABLE OF STATUTES

Sec. 391, Title 28, USCA 2

Sec. 556, Title 18, USCA 4

Sec. 688, Title 28, USCA 9

IN THE

(Hixmit ®0urt d ^ppaab

gov tl{£ ^mtlf Ctrrua

UNITED STATES OF AMERICA,

Plaintiff and Appellee,
vs.

JESSE H. SHREVE, ARCHIE C. \ ^ 070^

SHREVE, DANIEL H. SHREVE, ^
GLEN 0. PERKINS, and
W. C. EVANS,

Defendants and Appellants.

REPLY BRIEF OF APPELLANTS

JESSE H. SHREVE and ARCHIE C. SHREVE

Counsel for the Government, in their brief sug-
gest that appellants' (defendants') opening brief does
not contain a sufficient statement of the facts or
evidence. They do not point out wherein defend-
ants' brief is insufficient in this respect, nor do they
supply the asserted insufficiency. Counsel think that
the statement of the facts in defendants' opening
brief is sufficient to present a fair understanding of
the case, measured by the prescribed page limitation
of their brief and the size of the record.

Counsel for the Government apparently for the

(I)

(2)

lack of a more convincing reply, meet some of the
questions raised by relying upon the often asserted
expressions like ''no prejudice is shown". Illustra-
tions are found on pages 4, 9 and 19 of their Brief.
They supplant a plea of defendants ''by asking that
justice be done in this case" p. 26). The thought
had not occurred to defendants or their counsel that
justice will not be finally done. They say again that
because of "lack of any prejudicial error, the judg-
ment should be affirmed" (p. 32). That is often the
refuge of prosecutors who, when confronted with the
careless manner in which they proceeded in the Court
below, implore the reviewing Court to condone that
carelessness by finding the error harmless rather
than prejudicial. It is not begging the question to
say that defendants surrounded themselves with ev-
ery protection accorded them by well conceived and
long applied principles of law when they disclaimed
the guilt charged to them by the indictment. Coun-
sel for the Government having ignored these prin-
ciples, with the sanction of the trial court, should
not now be heard to justify their conduct by invok-
ing amorphisms which themselves might also result
in depriving defendants of justice. Repeated re-
jection of wholesome principles of law often require
that justice prevail notwithstanding the verdict.

The Congress has said that this Court shall give
judgment after an examination of the entire record
"without regard to technical errors, defects or ex-
ceptions which do not affect the substantial rights
of the parties" (Sec. 391, Title 28, USCA). The
errors asserted here go far beyond "technical er-
rors, defects or exceptions", and because they do it
seems to us that the limitations of the statute last
quoted itself marks the point where harmless error

(3)

ends and prejudicial error begins. The errors we
have pointed out are not technical errors or de-
fects,— they are errors of substance which even the
most inexperienced practitioner would recognize and
avoid.

Counsel for the Government have brought them-
selves within the criticism of Coulston vs. U. S.
(CCAIO) 51 Fed. (2nd) 178, 182, where it is said:

"To all of this, the appellee answers that
the jury convicted upon abundant evidence
and that the errors complained of were not
prejudicial. The same contention was made
to the Eighth Circuit Court of Appeals many
years ago, and in response thereto that Court
(Sanborn, Van Devanter, and Phillips sitting)
said : 'The zeal, unrestrained by legal barriers,
of some prosecuting attorneys, tempts them to
an insistance upon the admission of incompet-
tent evidence, or getting before the jury some
extraneous fact supposed to be helpful in se-
curing a verdict of guilty, where they have
prestige enough to induce the trial court to
give them latitude. When the error is expos-
ed on appeal, it is met by the stereotyped ar-
gument that it is not apparent it in any wise
influenced the minds of the jury. The reply
the law makes to such suggestion is: that, af-
ter injecting it into the case to influence the
jury, the prosecutor ought not to be heard to
say, after he has secured a conviction, it was
harmless. As the appellate court has not in-
sight into the deliberations of the jury room,
the presumption is to be indulged, in favor of
the liberty of the citizen, that whatever the

(4)

prosecutor, against the protest of the defend-
ant, has laid before the jury, helped to make
up the weight of the prosecution, which re-
sulted in the verdict of guilty' ".

ARGUMENT

FIRST

(Appellee's Brief, p. 2)

Government counsel, in order to avoid the duplic-
ity of the indictment, are required, as were we, to
parse the indictment in order that it may be under-
stood. An indictment should be free from such^ im-
perfection. If the indictment were a clear exposition
of a criminal pleading, it should not require explana-
tion to interpret it.

Sec. 556, Title 18, USCA, is inapplicable because
duplicity is more than a matter of form.

Creel vs, U. S., (CCA8) 21 Fed. (2d) 690.

SECOND

(Appellee's Brief, p. 3)

Government counsel state that we do not point
out how defendants were prejudiced by the ruling
of the court on the insufficiency of the bill of par-
ticulars (p. 4). The bill itself points out the pre-
judice. It is exemplified by the next succeeding
Assignment of Error XXIV (appellants' opening
brief pps. 16-20). Prejudice is further pointed out
at other places in defendants' opening brief. When
the Court ordered the bill of particulars, thus re-

(5)

versing the order of the trial court in denying it
(Shreve vs. U. S., 77 Fed. (2d) 2), this Court knew
that the information which counsel for the Govern-
ment refer defendants to, arising out of the previous
trials of the case, was then available to defendants.
The fact is counsel for the Government have, with
the trial court's sanction, substituted their will for
the judgment of this Court and thus they have de-
prived defendants of something this Court said they
should have.

Ciafirdini vs. U. S., 266 Fed. 471, cited by Gov-
ernment counsel, is not in point, because the bill was
not ordered by the appellate court after the first and
before the second trial of the case as herein. Wong
Tai vs. U. S., 273 U. S. 77, Dunlop vs. U. S., 16*5
U. S. 486, and Rosen vs. U. S., 161 U. S. 29, are
not in point because there the questions involved the
exercise of discretion by the trial court which the
Supreme Court refused to disturb.

THIRD

(Appellee's Brief, p. 5)

The testimony of the Government's witness Fier-
stone did go beyond the last day of any indictment
allegation. The trial court instructed the jury that
such evidence could only be considered for the pur-
pose of determining intent (R. 876). Counsel for
the Government insist that the instruction is enough
to authorize the testimony and point out that no
exception was taken to this instruction. Undoubt-
edly the testimony was admissible for the purpose
of proving intent, but defendants were not informed
what testimony would be offered to prove intent,

(6)

and therein partly lies the insufficiency of the bill
of particulars.

We agree with counsel for appellee "that acts
of the defendants and circumstances after the com-
mission of the crime, frequently point more con-
clusively and unerringly to the guilt of those accused
than do their prior acts" (p. 6) but nothing could
more perfectly point out the insufficiency of the
bill of particulars than the omission to specify the
evidence which would be relied upon to constitute
those acts.

FOURTH

(Appellee's Brief, p. 6)

Under this section of their brief. Government
counsel attempt to meet the assignments of error
relating to the refusal of the trial court to permit
defendant Archie C. Sdreve to testify to conversa-
tions opened by Government witnesses Perkins and
Hobbs concerning him and his co-defendant, Jesse
H. Shreve (Appellant's opening brief, pps. 20-40).
Government counsel state that conversations cannot
be opened on cross-examination and then used as a
basis for introducing self-serving statements of the
defendants (Appellee's brief, p. 7). Again, coun-
sel misapply the law of self-serving statements. We
have pointed out the law and its true application
(Appellants' Brief, p. 32-36).

The fact that the conversations were brought out
on cross-examination does not alter the rule of the
right of defendants to explain or give their version
of the conversations. Perkins was still a Govern-

(7)

merit witness, although testifying on cross-examina-
tion. Besides, he did not tell the whole story on
direct examination. His narrative was then limited
to the defendant Jesse H. Shreve (R. 615, 621, 622,
623). On cross-examination he associated defend-
ant Archie C. Shreve with the conversations (R.
641-42) and then, as we have shown in the opening
brief (R. 30-37) the defendant Archie C. Shreve
should have been permitted to give his version of
those conversations. The jury in arriving at its
verdict must have considered not only the testimony
of Perkins on direct examination but also on cross-
examination.

Government counsel assert that the testimony of
the defendant Archie C. Shreve was an attempt to
put in defense matters by way of self-serving state-
ments instead of calling the defendant Jesse H. Shreve
to testify on his own behalf (Appellee's Brief, pps.
10-11). We know of no rule, and we have been un-
able to find one, which deprives a defendant from
receiving the benefits of his co-defendant's testi-
mony. The correct conclusion is that the defendant
Arcdie C. Shreve should have the same right to
testify both for himself and his co-defendant as had
Perkins and Hobbs the right to testify against both
of them.

With regard to defendants' offer of proof, Gov-
ernment counsel say appellants failed to ask for any
rulings upon this offer and the Court made none
(Appellee's Brief, p. 10). How could the trial court
make a ruling upon something he would not hear?
(R. 790). In view of the trial court's attitude, the
defendants were hard pressed to preserve the record
at all and undoubtedly went farther than they were
required.

(8)

The facts are that Perkins and Hobbs, as Gov-
ernment witnesses, opened and gave testimony con-
cerning conversations with both defendants. Then,
under the authorities cited (Appellants' opening
brief, pps. 32-36) defendants were entitled to give
their version of the conversations.

C/. Hills vs. U. S. (CCA9) 97 Fed. (2d) 710.

The conversations must have been material, oth-
erwise Counsel for the Government would not have
elicited them. When they say that ''the witness for
defendant was permitted to go as far in his testi-
mony as the witness for the Government" (Appel-
lee's Brief, p. 13) they overstate the record as will
appear by comparing the testimony of Perkins (R.
641-642) and Hobbs (389-392) with defendants'
offers of proof (Appellants' opening brief, appen-
dix, pps. 1-15).

Appellee, at pages 14 and 15 of their brief, seek
to justify the admission of Government's exhibit 207
(R. 722-727) because, as counsel for the Government
say, the defendants and Dan Shreve, Glen Perknis,
John Hobbs and J. G. Cash all had a part in de-
vising the scheme. That is a curious justification
in view of the objection that was made to admission
of the exhibit in evidence (R. 723) and as assigned
as error and briefed (appellants' opening brief, p.
38-40).

FIFTH

(Appellee's Brief, p. 15)

Counsel for the Government have not treated
these assignments of error (Appellants' opening

(9)

brief, pps. 41-49) with the consideration their im-
portance merits. The instruments embraced by the
assignments of error, and the testimony relating to
them, fill a large part of the record (Appellants^
opening brief (p. 50, footnote 21). The resulting pre-
judice is not denied by Government counsel. They
rely in justification upon Section 688, Title 28,
USCA (Appellee's Brief, p. 16). That section has
nothing whatever to do with these instruments be-
cause they are solely records of local County Re-
corders. Section 688, supra, as we have stated in
appellants' opening brief, (P. 50, foot note 22) per-
tains only to foreign records, that is records of states,
territories, and possessions of the United States other
than the state of the forum, as these here are. Sec.
688, supra, provides:

"All records and exemplifications of books,
which may be kept in any public office of any
State or Territory, or of any country subject
to the jurisdiction of the United States, not
appertaining to a court, shall be proved or
admitted in any Court or office in any other
State or Territory, or in any such country, by
the attestation of the keeper of the said records
or books, and the seal of his office annexed, if
there be a seal, together with a certificate of
the presiding justice of the court of the county,
parish, or district in which such office may be
kept, or of the governor, or secretary of state,
the Territory or country, that the said testa-
tion is in due form, and by the proper officers.
If the said certificate is given by the presiding
justice of a court, it shall be further authen-
ticated by the clerk or prothonotary of the
said court, who shall certify, under his hand

(10)

and the seal of his office, that the said presid-
ing justice is duly commissioned and qualified ;
or, if given by such governor, secretary, chan-
cellor, or keeper of the great seal, it shall be
under the great seal of the State, Territory, or
country aforesaid in which it is made. And
the said records, and exemplifications, so au-
thenticated, shall have such faith and credit
given to them in every court and office within
the United States as they have by law or
usage in the courts or offices of the State,
Territory, or country, as aforesaid, from which
they are taken."

Contrary to the statement of Gevomment coun-
sel, the last sentence of the foregoing statute also
applies to foreign records, as the words which we
have italicized unquestionably demonstrate.

The statute was enacted to effectuate Section 1
of Article 4 of the Federal Constitution (the full
faith and credit clause) and that provision of the
Federal Constitution pertains only to acts, records
and judicial proceedings of other states.

Atchison, T. & S. F. Ry. Co., vs. Sowers, 213
U. S. 55, 29 Sup. Ct. Rep. 397, 53 L. Ed. 695.

Myres vs. U. S., 256 Fed. 779, 728, cited by coun-
sel for the Government, helps their position none
because that decision treats upon the question of
practice rather than evidence, but, if Government
counsel insist that it supports their position, then
it is contrary to the statute itself and the decision
of the Supreme Court in Atchison, T. & S. F. Ry.
Co., supra.

(11)

SIXTH — SEVENTH

(Appellee's Brief, pps. 16-18)

These sections of Appellee's Brief are met by
the arguments presented on the question in appel-
lants' opening brief (pps. 59-66 and 66-88).

Counsel for the Government (p. 16) state:

"In the first place, the witness Watt testi-
fied that he did not rewrite any of the books
of the Security Building & Loan Association
(347). This is the only company involved in
the first three counts of the indictment".

That statement does not square with the testi-
mony of the witness Watt. He testified:

"I did not rewrite any books of the Se-
curity Building & Loan Association, except
trace entries in the Building and Loan books
which pertained to the Century Investment
Trust or the Arizona Holding Corporation.
/ traced them from the rewritten books of the
Gentry Investment Trust." (R. 347).

In addition, the witness Watt testified: ''These
rewritten entries in the Century Investment Trust
had a bearing thereafter upon the books of the Se-
curity Building & Loan Association; they had a
bearing before that time, if I understand your ques-
tion correctly." (R. 349).

The defendant, Archie C. Shreve testified as
follows :

(12)

"I heard the testimony of R. F. Watt, wit-
ness for the Government, that he rewrote the
books. I did not direct him to rewrite these
books. I don't know anything about the re-
writing of these books. I never heard tell of
the books being rewritten before the trial of
this case in Tucson in 1934. That is the first
time I ever knew of these books being re-
written". (R. 777, 778).

Assuming, as stated by counsel for the Govern-
ment (p. 18) that the opinion on the former appeal
became the law of the case, nevertheless, that opin-
ion is based upon the assumption that the defend-
ants controlled the corporations named in the in-
dictment. The law of the case announced in the
decision on the former appeal assuredly does not
bind the defendants for unauthorized acts of the
Government witness Watt. In rewriting these books,
he testified: *'To a great extent, I relied upon in-
formation / found myself in order to rewrite these
books" (R. 345). He testified that in rewriting the
books, that neither defendant requested him to re-
write these books or counseled with him in rewrit-
ing them (R. 347). These acts of Watt take his
evidence and these books beyond the law of the case.
They are the personal acts of Watt himself as a
result of which they bring into the record hearsay
transactions, which were neither directed nor con-
trolled by the defendants and which carry them
beyond the decision on the former appeal thereby
rendering them objectionable as hearsay transactions
under the decisions of this Court in the following
cases :

Wilkes vs. U. S., 80 Fed. (2nd) 285

(13)

Osborne vs. U. S.. 17 Fed. (2nd) 246

Greenbaum vs. U. S., 80 Fed. (2nd) 113

Pabst Brewing Company vs. E. Clemens Horst
Company, 229 Fed., 913.

EIGHTH

(Appellee's Brief, p. 19)

This section of Appellee's Brief refers to assign-
ments of error which relate to admission in evidence
of records of the First National Bank of Prescott.
Defendants were neither officers, directors nor em-
ployees of that Bank. (R. 300, 324, 337).

These were entries of a bank wholly disassociat-
ed from the indictment and defendants. There is
nothing to show that these defendants "made such
entries or caused them to be made or assented
thereto", which this Court on the former appeal held
was essential to show before these records were ad-
missible. {Shreve vs. U. S., 77 Fed. (2nd) 2, 7).
Besides the records as admitted were hearsay trans-
actions. (R. 300, 309, 312, 313).

Treating upon Government's Exhibit 84, counsel
for the Government say that "The appellants in their
brief have failed to point out how any prejudice
could arise from the introduction of this Exhibit"
(Appellee's Brief, p. 19). If the exhibit created no
prejudice against the defendants, then why did coun-
sel for the Government introduce it? It was pre-
judicial. The Exhibit was one of many hearsay
transactions relating to the First National Bank of
Prescott (R. 294-343) and, having been introduced,

(14)

counsel for the Government now say they are harm-
less. The transactions involved personal loans of
$10,000.00 each to Glen Perkins, J. G. Cash and
Joseph E. Shreve (R. 313, 314) totaling $30,000.00,
and were paid by drafts of the Securtiy Building
& Loan Association (Government's Exhibit 96, R.
316) as testified to by Government's witness Evans
(R. 315). If this evidence was without prejudice,
that does not compare with the importance Govern-
ment counsel attached to it because the fact is the
indictment was dismissed against Evans so as to
qualify him to testify with respect to these loans
and other transactions of the First National Bank
of Prescott (R. 181) after his conviction on the
former trial (R. 180).

On the former appeal this Court pointed out the
way to admit these records, but that decision was
ignored (Shreve vs. U. S., 77 Fed. (2d) 7). And
since there was no official connection between these
defendants and the First National Bank of Prescott,
the rule theretofore announced by this Court applied,
as typlified by the following cases:

Osborne vs. U. S., 17 Fed. (2d) 246.

Wilkes vs. U. S., 80 Fed. (2d) 285.

And again, in emphasis of the Wilkes Case, this
Court pointed to the error in admitting these records
of the First National Bank of Prescott in Greenbaum
vs. U. S., No. 8739, decided August 10, 1938. Since
that decision, and before, these records of the First
National Bank of Prescott were just as inadmissible
because of the objections taken to them against these
defendants as were the records of the Clarence Sand-
ers Store against the defendants Greenbaum.

(15)

NINTH

(Appellee's Brief, p. 22)

The Government's auditor and witness Schroeder
blew both hot and cold. When interrogated by coun-
sel for the Government he testified his audit was
made from books and records in evidence or, in some
instances, from books and records before the Court.
On cross-examination he testified to the contrary.

For illustration, let us take the York loan (R.
658 et. seq.) While he testified he did not neces-
sarily have to verify this transaction with the rec-
ords of the Commercial National Bank of Phoenix
(R. 683) still he couldn't recall whether he did or
not (R. 683). He worked upon records of the Com-
mercial National Bank in connection with the audit
he prepared **in this case" (R. 683, 684). He
couldn't say specifically, but '^probably in connec-
tion with some of the loans which I have testified
to today'^ (R. 684). He did not have his notes of
the audit of Commercial National Bank and he did
not know where they were (R. 684). Referring to
his work sheets, he said, "I imagine it is up to the
United States Attorney to see them". (R. 684).

The Commercial National Bank is not a corpora-
tion named in the indictment, nor is it mentioned in
the bill of particulars, and, more important, not one
witness identified a book or record of that bank and
not one such book or record wa^ offered or received
in evidence.

The residium of Schroeder's testimony is this:
the witness audited many books and records, some

(16)

of which were in evidence and some were not. The
witness selected such portions of that audit as, in
his opinion, suited his notion of the case for the
Government. Thus he became the judge of its relev-
ancy, but when defendants' counsel sought to test
that relevancy in connection with his audit of the
books and records of the Commercial National Bank,
he did not have his audit notes (R. 684). Counsel
for the Government dismiss these assignments of
error, speaking metaphorically, with flourish of the
hand, but the conclusion follows from the whole
testimony of Schroeder that his audit and his tes-
timony based thereon were not in part at least con-
fined to books and records in evidence or before the
Court.

TENTH

(Appellee's Brief, p. 23)

Admission in evidence of the Perry mortgage
(Exhibit 170, R. 547, 548) and the sheriff's deed
(Exhibit 172, R. 551, 552) are still unjustified by
counsel for the Government. They say (p. 24) they
were not offered to show that no title was received
by the Blackburn deed (Exhibit 144, R. 517). Since
all these exhibits embraced identical property, then
the manifest purpose of the Blackburn deed was to
show that Blackburn conveyed property to the Ari-
zona Holding Corporation which Perry mortgaged to
the Yavapai County Savings Bank. No other reason
supports the introduction of the Blackburn deed in
evidence.

Counsel for the Government say that the pur-
pose of the evidence was to show, that when the

(17)

property was deeded to A. E. Reyburn, she mort-
gaged the property back to the grantor, which in
turn assigned it to Security Building & Loan Asso-
ciation and that the Reyburn mortgage was not a
first mortgage as represented by defendants (Appel-
lee's Brief, p. 24). Strange, indeed, is this state-
ment. The deed to Reyburn (Exhibit 141, R. 512)
and the Reyburn mortgage (Exhibit 142, R. 514)
and the assignment of this mortgage (Ex. 143,
R. 516) embrace the identical property described in
the Blackburn deed (Exhibit 144, R. 517). Other-
wise it is pertinent to inquire, Why was the Black-
burn deed introduced in evidence?

Government counsel assert that the Reyburn mort-
gage (Ex. 142, R. 514) "was not a first mortgage
as represented by appellants" (p. 24). How did the
Government prove that statement? Simply by show-
ing that a party by the name of Perry mortgaged
property to Yavapai Savings Bank (R. 547, 548)
which Blackburn deeded to Arizona, Holding Cor-
poration (R. 516, 517). Blackburn did not testify,
although his deed was introduced over objection by
defendants (R. 516, 517). Perry did not testify
either. His mortgage to Yavapai Savings Bank was
received in evidence upon testimony of the Secre-
tary of the bank that the bank ''took a mortgage
on the property described in Government's Exhibit
170 for identification, being a mortgage signed by
William Perry. "I recognize his signature" (R.
547). That is the limit of the testimony. It does
not prove that Perry owned the property mort-
gaged. It does not prove that Blackburn did not
own it. It does not competently prove that the
''Reyburn mortgage was not a first mortgage", as
Istated by counsel for the Government (p. 24). The

(18)

Exhibit was inadmissible for every reason stated
in the objection to it (R. 547).

ELEVENTH

(Appellee's Brief, p. 25)

Counsel for the Government by this section of
their brief leave unanswered Assignment XXVIII
(Appellants' opening brief, p. 94) relating to the
hearsay testimony of the witness York unless state-
ments like "It may well be the understanding of the
witness" and 'In view of ths overwhelming proof
of the guilt of the defendants" (Appellee's Brief,
p. 26) are permitted to be substituted for the law
which applies to the record before us. It is hardly
fair to the defendants for Government counsel to
meet the impact of this error by excusing it with
sentences of transfiguration.

TWELFTH

(Appellee's Brief, p. 26)

After reading the argument under this division
of appellee's brief, we still cannot understand why
Government's witness Fierstone should have been
permitted to testify concerning the accounting prac-
tices between the Security Building & Loan Associa-
tion and Century Investment Corporation, and then
deny to defendants' witness Crane the opportunity
to testify on the same subject (R. 834, 835). Coun-
sel for the Government now approach the question
upon a different theory than they did below. They
now say the question was not sufficiently broad to
meet the requirements of a hypothetical question and

(19)

:eft too much to the imagination of the witness (Ap-
pellee's Brief, p. 26). That was not the basis of
their objections below (R. 834, 835). Then they
:hought it called for a conclusion and invaded the
province of the jury.

THIRTEENTH

(Appellee's Brief, p. 27)

Counsel for the Government say the term ''af-
firmative act" employed by the trial court in its
charged to the jury ''is neither a legal nor a technical
:erm" (p. 27). Then Judge Wilbur, by comparison,
vas wrong when he said that the term "proper
.varning" was a term that required definition ( Young
vs. Southern Pacific Co., 182 Cal. 369, 190 Pac. 36,
11). We prefer to follow Judge Wilbur,

In respect to the refusal of the trial court to
nstruct upon the failure of proof concerning the
ndictment allegation of paid in capital stock of
5300,000.00, the question is not answered by saying
'he trial court instructed the jury that the indict-
nent should not be considered as evidence (Appellee's
3rief, p. 26). Thus, accepting that postulate, we
!.ave the anomaly that, since the defendants are
harged with criminal misrepresentation that the
^aid in stock of the Security Building & Loan Asso-
dation was $300,000.00, whereas it was only $45,-
100.00 (R. 5, 6), then the failure of proof of this
lamaging allegation is compensated by the charge
jo the jury that the indictment should not be con-
sidered as evidence. Even after the charge in this
espect, this allegation was still left in the indict-
laent and it was still before the jury.

(20)

The difference between $300,000.00 and $45,-
000.00 paid in capital stock was sufficiently import-
ant, involving as it does criminal fraud, that it should
have been eliminated beyond any possibility of con-
sideration by the jury.

Counsel for the Government do not take issue
with the statement of counsel for the defendants that,
whereas exception to the refusal to give this re-
quested instruction was saved, it was inadvertently
omitted from the bill of exception (Appellants' Brief,
p. 106). In view of the seriousness of the error,
we respectfully request the Court to consider this
assignment of error.

FOURTEENTH

(Appellee's Brief, p. 28)

Counsel for the Government here confuse the

schemes with the physical acts of mailing. The
difference is important.

This amazing statement appears in the brief of
counsel for the Government, speaking of co-schemers:

"He may not know what his partners are
doing but he is bound by their acts", (p. 29).

The cases cited support no such statement, and
it is at war with every concept of American juris-
prudence. The indictment itself, in respect to the
mailing of the indictment letters, alleges that de-
fendants did such acts ''knowingly" (R. 611, 612,
618, 620, 622, 624, 625, 630, 633, and 635).

The testimony of the witness Perkins quoted by

(21)

lounsel for the Government (Appellee's Brief, p. 31)
hows defendants' connection with the corporations
n point of time. It parallels the testimony of the
xovernment's witness Hobbs, who was an officer
if the corporation (R. 582). Perkins himself tes-
if ied :

"The orders for the Tucson office came
from the Phoenix office when Archie was
here * * * came from Jesse H. Shreve, Archie
Shreve or when Dan Shreve was here". (R.
636).

"At the time Archie Shreve was here he
was in the same capacity, as far as I was
concerned, as Dan was afterwards. When Dan
came over he stepped in where Archie left
off, which was in the first part of January,
1930. Then Archie stepped out of the pic-
ture and Dan moved in". (R. 638).

Every indictment letter was mailed in 1931 and
lince Perkins, as appears above, testified that Dan
:ame over in the first part of January 1930, obvi-
>usly the letters were mailed during the adminis-
ration of the affairs of the corporations by Dan
ihreve, Perkins and Hobbs.

We repeat, as we stated in the opening brief,
hat the evidence of mailing is not sufficient to
)rove beyond a reasonable doubt that the defendants
Fesse H. Shreve and Archie Shreve mailed the in-
iictment letters, or knew that they were mailed.

CONCLUSION

The errors assigned, and arguments predicated

(22)

thereon, as set forth in appellants' opening brief,
have not been met by the brief of Government coun-
sel. The law of the case is virtually conceded by
Counsel for the Government, and, as between all
counsel, the facts are singularly free from dispute.

For all the reasons now before the Court, de-
fendants again respectfully request that the relief
prayed for in their opening brief be granted.

Respectfully submitted,

Leslie C. Hardy,

Attorney for Appellants

Jesse H. Shreve and Archie C. Shreve

605 Title & Trust Building,
Phoenix, Arizona

George H. Shreve,

Washington Building,
Los Angeles, California

On the Brief.

No. 8781

IN THE

United States Circuit Court of Appeals

For the Ninth Circuit

Jesse H. Shreve and
A.RCHIE C. Shreve,

Appellants^

vs.

United States of America,

Appellee}

APPELLANTS* PETITION FOR REHEARING

AND

APPLICATION FOR STAY OF ISSUANCE OF

MANDATE AND AFFIDAVIT IN SUPPORT

THEREOF

Leslie C. Hardy
Louis B. Whitney
Attorneys for Appellants,

703 Luhrs Tower,
Phoenix, Arizona.

]q:^q

p

i

ijy

No. 8781

IN THE

United States Circuit Court of Appeals

For the Ninth Circuit

Jesse H. Shreve and
Archie C. Shreve,

Appellants^

vs.

United States of America,

Appellee}

APPELLANTS' PETITION FOR REHEARING

AND

APPLICATION FOR STAY OF ISSUANCE OF

MANDATE AND AFFIDAVIT IN SUPPORT

THEREOF

Leslie C. Hardy
Louis B. Whitney
Attorneys for Appellants,

703 Luhrs Tower,
Phoenix, Arizona.

TABLE OF AUTHORITIES CITED

CASES

Page

Adam v. Saenger, 303 U. S. 59, 82 L. Ed. 649 6

Atchison T. & S. F. Ry. Co. v. Sowers, 213 U. S.

55, 29 Sup. Ct. Rep. 397, 53 L. Ed. 695 4, 6

Chaffee & Co. v. U. S., 18 Wall. 516, 21 L.
Ed. 908 11,13

Myres v. U. S. (CCA 5) 256 Fed. 779 6, 7

Shreve v. U. S., 77 Fed. (2d) 2, 7 14

Slaten v. Hall (Ga.) 172 Ga. 675, 158 S. E. 747 5

Turnbull v. Payson. 95 U. S. 418, 24 L. Ed. 437 6

Wilcox V. Bergman (Minn.) 5 L.R.A. (N.S.) 938 6

Wilkes V. U. S., 80 Fed. (2d) 285 13

TEXT BOOKS AND STATUTES

Section 687, Title 28, USCA 6

Section 688, Title 28, USCA 3, 5, 6, 7, 8, 9, 11

Revised Statutes, Section 905 6

Revised Statutes, Section 906 2

1 Statutes at Large, Section 122 6

Jones on Evidence (Fourth Ed.) Vol. 2 page 999,

Par. 523 9

UNITED STATES CONSTITUTION
Section 1, Article IV 5, 7

No. 8781

IN THE

United States Circuit Court of Appeals

For the Ninth Circuit

Jesse H. Shreve and
Archie C. Shreve,

Appellants\

vs.

United States of America,

Appellee}

APPELLANTS' PETITION FOR REHEARING

AND

APPLICATION FOR STAY OF ISSUANCE OF

MANDATE AND AFFIDAVIT IN SUPPORT

THEREOF

TO THE HONORABLES, Francis A. Garrecht, Bert
Emoiy Haney and Albert Lee Stephens, Judges of
the United States Circuit Court of Appeals for the
Ninth Circuit:

The appellants herein respectfully petition this
Honorable Court for a rehearing of this cause, and
for grounds thereof say:

L

ASSIGNMENT OF ERRORS VIII TO XII, IN-
CLUSIVE (BRIEF OF APPELLANTS, PPS. 41
TO 47, FIFTH SPECIFICATION PPS. 40-41) RE-

LATE TO THE ADMISSION IN EVIDENCE OF
EXEMPLIFIED COPIES OF DEEDS, MORT-
GAGES, AND ASSIGNMENTS OF MORTGAGES.
THESE ASSIGNMENTS OF ERROR ARE DIS-
POSED OF BY THE COURT AT PAGES 17 TO
20, INCLUSIVE, OF THE OPINION. THIS COURT
ERRED IN DECIDING THAT THESE EXEMPLI-
FIED COPIES OF DEEDS, MORTGAGES, AND
ASSIGNMENTS OF MORTGAGES WERE AD-
MISSIBLE IN EVIDENCE UNDER THE PRO-
VISIONS OF SECTION 906 OF THE REVISED
STATUTES (28 USCA, SEC. 688).

Appellants contend that the last mentioned statute
(28 USCA, Sec. 688) has no application whatever to
the exemplified copies of the deeds, mortgages and
assignments of mortgages which were introduced in
evidence by the Government against appellants, all
of which are referred to in Assignments of Error
VIII to XII, inclusive. The correct decision of this
question is important to appellants. It is also im-
portant because it announces a rule of law which we
believe is not only contrary to the statute itself, but
also contrary to decisions of courts which have con-
strued the statute, including the Supreme Court of
the United States.

We have shown in the Brief of Appellants, begin-
ning at pages 47 to 69, inclusive, that these deeds,
mortgages, and assignments of mortgages were an
indispensable part of the case for the Government.
Their effect, after they were admitted in evidence,
was so prejudicial that it is essential that it be de-
termined beyond possibility of doubt that these in-
struments were properly admitted.

Section 688, 28 USCA, reads as follows:

'* Proofs of records in offices not pertaining to
courts. All records and exemplifications of
books, which may be kept in any public office
of any State or Territory, or of any country
subject to the jurisdiction of the United States,
not appertaining to a court, shall be proved or
admitted in any court or office in any other
state or Territory, or in any such country, by the
attestation of the keeper of the said records or
books, and the seal of his office annexed, if there
be a seal, together with a certificate of the pre-
siding justice of the court of the county, parish,
or district in which such office may be kept, or
of the governor, or secretaiy of state, the chan-
cellor or keeper of the great seal, of the State,
or Territory, or country, that the said attesta-
tion is in due form, and by the proper officers.
If the said certificate is given by the presiding
justice of a court, it shall be further authen-
ticated by the clerk or prothonotary of the said
court, who shall certify, under his hand and the
seal of his office, that the said presiding justice
is duly commissioned and qualified; or, if given
by such governor, secretary, chancellor, or keeper
of the great seal, it shall be under the great seal
of the State, Territory, or country aforesaid in
which it is made. And the said records and
exemplifications, so authenticated, shall have
such faith and credit given to them in every
court and office within the United States as they
have by law or usage in the courts or offices of
the State, Territory or country, as aforesaid,
from which they are taken."

4

The Supreme Court of the United States in Atchi-
son T. & S. F. Ry. Co. v. Sowers, 213 U. S. 55, 29
Sup. Ct. Rep. 397, 53 L. Ed. 695, has held that Sec-
tion 688, supra, was enacted for the purpose of
giving effect to Section 1, Article IV of the Constitu-
tion. We tried to point this out at pages 9 and 10 of
Appellants' Reply Brief. Lest there be any mistake,
we quote from the Sowers case, beginning at page 64
of the U. S. Reports:

'To make effectual the full faith and credit
clause of the Constitution (Art. IV, Sec. 1)
Congress passed the act of May 26, 1790, 1 Stat.
122, c. 11. This act made provision for the
authentication of the records, judicial proceed-
ings and acts of the legislatures of the several
States, and provided that the same should have
such faith and credit given them in every State
within the United States as they have by law or
usage in the courts of the State from which the
records are or shall be taken. This act did not
include the Territories.

"On March 27, 1804, Congress passed an act
extending the provisions of the former statute to
the public acts, records, judicial proceedings, etc.,
of the Territories of the United States and
countries subject to the jurisdiction thereof. 2
Stat. 298, c. 56. Those statutory enactments
subsequently became Sections 905 and 906 of
the Revised Statutes. Section 905 applies to judi-
cial proceedings, and Section 906 to records,
etc., kept in offices not pertaining to courts.

The Supreme Court of Georgia, in the case of

5

Slaten v. Hall, 172 Ga. 675, 158 S. E. 747, said:

"Section 688, tit. 28 of the U. S. Code An-
notated, which was created to carry into effect
Article IV, Section 1, of the Federal Constitu-
tion * * *."

Section 1 of Article IV of the Federal Constitution
provides as follows:

"Full Faith and Credit shall be given in each
State to the public Acts, Records, and judicial
Proceedings of every other State. And the Con-
gress may by general Laws prescribe the Manner
in which siich Acts, Records and Proceedings
shall be proved, and the Effect thereof."

It will be observed that the constitutional provision
provides that full faith and credit shall be given in
each state to records of every other state, that is to
say, foreign records. Section 688, supra, was
enacted to carry into effect this constitutional provi-
sion in conformity with the last sentence of Section
1 of Article IV. Section 688 plainly provides that "all
records * * * which may be kept in any public of-
fice of any state * * * not appertaining to a court
* * * shall be admitted in any court * * * in any other
state."

These deeds, mortgages and assignments of mort-
gages are not public records of another state, but
they are records of public offices within the state of
Arizona, which in this case is the state of the forum.
Thus the statute itself points out the error of the
Court in deciding that these deeds, mortgages and

assignments of mortgages were properly admitted in
evidence.

The last sentence of Section 688 does not change
the purpose and effect of the statute, because the last
sentence which begins "And the said records * * *"
must refer to the records mentioned in the first sent-
ence of the statute.

Undoubtedly Section 688 refers only to foreign
records. See note to Wilcox v. Bergman (Minn.) 5
L.R.A. (N.S.) 938. At page 945 of this note, the
author cites Turnbull v. Pay son, 95 U. S. 418, 24 L.
Ed. 437. That decision construed 1 Statutes at Large,
Section 122, from which is derived R. S. Sec. 905
(Title 28, USCA, Section 687). This section differs
only from Section 688 in that it pertains to legisla-
tive acts and judicial records. The Turnbull decision
clearly discloses that the act there construed referred
only to foreign records. See also Adam v. Saenger,
303 U. S. 59, 82 L. Ed. 649. The last mentioned
case conclusively shows that R. S. 905 (28 USCA,
Section 687) was enacted to carry into effect the
full faith and credit clause of the Constitution,
namely. Article IV, Section 1. Since Sections 687
and 688, Title 28, USCA, differ only in respect to
the character of the records therein referred to (A.
T. & S. F. Ry. Co. v. Sowers, supra), it seems indis-
putable that both sections refer only to records of
other states and not to records of the state of the
forum, as these here are.

We had thought, as we said in the reply brief, that
Myres u. U. S. (CCA 5) 256 Fed. 779, cited in the
opinion, discussed a rule of procedure rather than a
rule of evidence, but if we are mistaken, nevertheless

we contend that Section 688, as construed by the
Supreme Court in the cases above cited, following
Section 1 of Article IV of the Constitution, relates
only to records of a state other than the state in
which they are utilized. In its true application Sec-
tion 688 applies to foreign records and not records
of the state of the forum.

If we are correct in our contention, then we submit
the Court has grievously erred in its opinion in this
respect. If the Court concludes it has erred, then we
respectfully urge that appellants are entitled to have
these assignments of error (VIII to XII, inclusive)
re-examined, as well as the argument and law pre-
sented in support thereof.

This Honorable Court, in quoting from the Myres
case, supra, (page 19 of the Opinion) says:

"It (Section 688) provides that such certified
records 'shall have such faith and credit given
to them in every court and office of the United
States as they have by law or usage in the courts
or offices of the state, territory or country as
aforesaid, from which they were taken.' The
effect of this provision is not an adoption of the
rules of practice as to the preliminaries neces-
sary to the introduction of certified records fixed
by the state statutes but to give to such certified
copies, when introduced, the like faith and
credit that they are accorded in the courts of the
state."

In the first place, in the Myres case, the Court had
under consideration a rule of practice under the
Texas law with reference to filing certified copies of

8

instruments before trial and notice to adverse parties
of such filing. In Texas, where the case was tried,
the state law required that certified copies should be
filed three days before the trial and that notice of
the filing be given to the adverse party. That situa-
tion is not analagous to the situation here, assuming
that the Myres case correctly interprets Section 688,
which we claim it does not. In the case at bar the
lower court admitted in evidence exemplified copies
of alleged deeds and mortgages not taken from other
states, bid recorded within the state of the forum.
We contend as seriously as we know how that these
exemplified copies should be admitted not under Sec-
tion 688, which relates solely to the records of states
other than the forum, but under the laws of the
forum, i.e. the laws of Arizona. (See Brief of Appel-
lants, and cases cited therein on pages 50 to 58, in-
clusive.) If these exemplified copies are not governed
by federal statute, and we are sure they are not, then
under the authorities cited in our opening brief, this
Honorable Court must go to the laws of Arizona to
determine the proof necessary to lay the foundation
for the admissibility of these copies.

If the Court please, the quotation from the Myres
case and the statute itself, definitely states (even if
the statute were applicable) that they (the exempli-
fied copies) shall be given such credit **as they have
by law or usage in the courts of the state from which
they are taken." So even if the statute by some
method of reasoning is held to be applicable to cases
tried in the forum where the exemplified copies origi-
nate, then they have to be introduced according to the
law or usage in the court of the forum, i.e., Arizona.
In short, using the last quoted portion of the Myres

9

case, they would not be afforded any faith or credit
unless the proper foundation were laid. (See Arizona
cases cited in our opening brief).

There would seem to be no question as to their
inadmissibility under the laws of Arizona without the
foundation first being laid. These exemplified copies
are not primary evidence — they are at best secondary
and, of couse, some showing should be made that the
originals cannot be procured or that such deeds and
mortgages were in fact executed (Jones on Evidence
4th Ed. Vol. 2 page 999, par. 523). There have been
many cases where forged deeds and mortgages have
been offered for recordation and actually recorded.
This Court, of course, cannot take judicial knowl-
edge that these mortgages and deeds were actually
executed by the defendants or under their direction.
The burden of proof cannot thus be shifted to de-
fendants. The jury should not be permitted to guess
as to the authenticity of these documents. Whatever
else may be said, we are confident that this Honor-
able Court inadvertently misconstrued the purpose
and effect of Section 688. Without these deeds and
mortgages the Government has no case in the first
instance, and even if it had a case, the bulk of the
charge in the indictment is built around and sought
to be proven by the introduction of these so necessary
documents. That their admission is highly prejudi-
cial goes without saying.

The same situation applies to the York mortgage
(See page 95, Brief of Appellants) . We need but call
attention to this Court's opinion (page 26), wherein
it is said :

10

''The appellants contend the testimony of York
was hearsay as to the defendants, and, there-
fore, inadmissible, but, in view of the production
of the exemplified copies of the mortgage, and
of the deed the connection between the letter of
the daughter and two of the companies named
in the indictment was established and testimony
relative thereto was admissible."

Thus, it will be seen that the admission of this
hearsay testimony is justified by the production of
the exemplified copy of the mortgage from York and
his wife to Security Building and Loan Association
(Record 562). No foundation was laid for the admis-
sion of the exemplified copy of this mortgage and
therefore it falls within the same category as the
other exemplified copies of mortgages which we have
discussed in this subdivision of this Petition for Re-
hearing. No foundation was even laid as provided
at common law.

There is not one word of proof in the record that
these defendants prompted the letter from York's
daughter to him, or that these defendants knew that
such a letter was written, or that they knew York
and his wife executed and delivered a mortgage to
Security Building and Loan Association. York'b
daughter testified (Record 560-562) that her hus-
band (who is the co-defendant Perkins to whom a,
severance was granted and who testified against,,
these defendants) had something for York to sign,
which was the mortgage in question.

Undoubtedly, as appears from this testimony. Per
kins was the originator of this fraudulent scheme and
not these defendants. In view of this state of the

i

11

record, therefore, it appears obvious that this testi-
mony was erroneously admitted. That it was pre-
judicial to these defendants is undeniable.

The same may be said as to Government's Exhibit
145, being an exemplified copy of a warranty deed
allegedly executed by Arizona Holding Corporation,
by A. C. Shreve, Vice-President, and Glen 0. Perkins,
Assistant Secretary, to A. E. Rayburn (Page 25,
Opinion).

We feel convinced that this Honorable Court, upon
a reconsideration of Section 688, will hold that it is
not applicable here and that the evidence should not
have been admitted without a proper foundation be-
ing laid, as provided by the statutes and the decisions
of the highest court in Arizona.

II.

SSTGNMENTS; OF F.RROT? YTTT TO YVT TXT-

I v^ jLK_>a- v-r i. 1

SUPREME COURT OF THE UNITED STATES
IN CHAFFEE & CO. v. U. S., 18 WALL. 516, 21 L.
ED. 908.

li

10

"The appellants contend the testimony of York
was hearsay as to the defendants, and, there-
fore, inadmissible, but^ in view of the pi^oduction
of the exemplified copies of the mortgage, and
of the deed the connection between the letter of
the daughter and two of the companies named
in the indictment was established and testimony
relative thereto was admissible."

Thus, it will be seen that the admission of this
hearsay testimony is justified by the production of
the exemplified copy of the mortgage from York and
his wife to Security Building and Loan Association
(Record 562). No foundation was laid for the admis-
sion of the exemplified copy of this mortgage and
therefore it falls within the same category as the
other exemplified copies of mortgages which we have
discussed in this subdivision of this Petition for Re-
hearing. No foundation was even laid as provided
at common law.

There is no proof in the record that these defendants
prompted the letter addressed to York by his daugh-
ter, or that they knew such a letter was written, or
that they knew York and his wife executed and de-
livered a mortgage to Security Building and Loan
Association. York testified that his daughter wrote
him (Record 560-562) that the company with which
her husband (Perkins) was connected, had some-
thing for York to sign, which was the mortgage in
question. Perkins was a co-defendant who was granted
a severance and who testified against appellants.

Undoubtedly, as appears from this testimony, Per-
kins was the originator of this fraudulent scheme and
not these defendants. In view of this state of the

11

record, therefore, it appears obvious that this testi-
mony was erroneously admitted. That it was pre-
judicial to these defendants is undeniable.

The same may be said as to Government's Exhibit
145, being an exemplified copy of a warranty deed
allegedly executed by Arizona Holding Corporation,
by A. C. Shreve, Vice-President, and Glen 0. Perkins,
Assistant Secretary, to A. E. Rayburn (Page 25,
Opinion).

We feel convinced that this Honorable Court, upon
a reconsideration of Section 688, will hold that it is
not applicable here and that the evidence should not
have been admitted without a proper foundation be-
ing laid, as provided by the statutes and the decisions
of the highest court in Arizona.

II.

ASSIGNMENTS OF ERROR XIII TO XVI, IN-
CLUSIVE (BRIEF OF APPELLANTS, PAGES 68
TO 73, INCLUSIVE, EIGHTH SPECIFICATION,
PAGE 68) RELATE TO THE ADMISSION IN
EVIDENCE OF RECORDS OF FIRST NATIONAL
BANK OF PRESCOTT, ARIZONA. THESE AS-
SIGNMENTS OF ERROR ARE DISCUSSED BY
THE COURT AT PAGES 21 TO 24, INCLUSIVE,
IN THE OPINION. THIS COURT ERRED IN
DECIDING THAT THESE RECORDS WERE
HARMLESS AND THAT THEY WERE ADMIS-
SIBLE IN EVIDENCE UNDER ANY DECISION
CONTRARY TO THE DECISION OF THE
SUPREME COURT OF THE UNITED STATES
IN CHAFFEE & CO. v. U. S., 18 WALL. 516, 21 L.
ED. 908.

12

It is difficult to understand how this Honorable
Court can conclude that the admission in evidence
of these records of the First National Bank of Pres-
cott was harmless. The trial court and counsel for
the Government assuredly did not think so, because
the record discloses that the Government utilized the
witnesses Trott, Evans and Faulkner to identify these
records and the transcript discloses that their testi-
mony and these records embrace some fifty pages
(See Transcript of Record, pages 294 to 343, Inc.,)
It was impossible for appellants to assign as error
all this testimony and the admission in evidence of
all these records because of the limitation which this
Court has placed upon the number of assignments of
error.

As one factual illustration of the error of this
Court in deciding that the admission in evidence of
these records was harmless, we point out to the
Court that three notes for $10,000.00 each were
signed by Joseph E. Shreve, Glen 0. Perkins and J. G.
Cash, and endorsed by the defendant Jesse H. Shreve
(Record 311). Not one of those notes was introduced
in evidence. The Court itself concedes this to be a
fact (Op. 22). But, more important than this, and
as proof of the fraud alleged in the indictment, these
personal notes of Joseph S. Shreve, Glen 0. Perkins
and J. G. Cash, which were endorsed by the defend-
ant Jesse H. Shreve, were paid by funds of Security
Building & Loan Association, one of the corporations
named in the indictment and around which most of
the fraudulent acts charged in the indictment gravi-
tated. We submit, Your Honors, that evidence of
this character cannot be harmless.

13

The rule of law announced in the case of Chaffee
& Co. V. U. S., swpra, does not admit of the introduc-
tion of these records of First National Bank of Pres-
cott against these defendants. This is particularly
true, because (1) the record affirmatively shows that
these defendants had no connection whatever with
the First National Bank of Prescott; because (2) the
First National Bank of Prescott is not mentioned in
the indictment; and because (3) the First National
bank of Prescott is not mentioned in the Bill of
Particulars; because (4) there is no proof in the
record that defendants, or either of them, had any
control or supervision of the records of that bank.

Now, if it can be logically and lawfully asserted
that, notwithstanding what we have said, as sup-
ported by the bill of exceptions, that these records of
a banking association wholly disassociated from these
defendants were properly admitted in evidence under
the decision in Wilkes v. U. S., 80 Fed. (2d) 285,
decided by this Court, then we contend that that case
has oveyTuled the decision of the Supreme Court of
the United States in Chaffee & Co. v. U. S., supra.
If this Court in the Wilkes case has not expressly
overruled the decision of the Supreme Court in the
Chaffee case, then certainly in its application to this
case, the rule of law announced there by the Supreme
Court of the United States has been refined away.

This Honorable Court says at page 23 of the
Opinion, that ''It was believed, in an earlier age, that
books of third parties were not admissible in evidence
upon the ground of res inter alios acta, but there is a
broader view now taken and the rule is somewhat re-
laxed ***''. If that rule is relaxed it has been

14

relaxed by this Court and not by the Supreme Court
of the United States.

But more than that, this Court at page 24 of the
Opinion quotes from the former opinion in this case
(77 Fed. (2d) 2, 7) to the effect that it was then
laid down as a rule of decision on the retrial of this
case, that in order to make these books of the First
National Bank of Prescott admissible against these
defendants that "it is essential to show that the de-
fendants made such entries or caused them to be
made, or assented thereto." The record in this case
shows no such thing.

Now, it seems to us, and respectfully of course,
that this Court by the present opinion not only has
refined away a rule of evidence as laid down by the
Supreme Court of the United States, but that it has
wholly retracted a rule of decision which was made
by this Court on the former appeal and upon which
these defendants were entitled to rely upon this trial
of the case. In a criminal case there certainly should
be more security than this with respect to a rule of
evidence projected by this Honorable Court for the
benefit of defendants and upon which they were en-
titled to and did rely.

III.

ASSIGNMENTS OF ERROR XXVI AND XXVII
(BRIEF OF APPELLANTS 87 TO 89, INCLU-
SIVE, TENTH SPECIFICATION, PAGE 87) RE-
LATE TO THE ADMISSION IN EVIDENCE OF A
MORTGAGE EXECUTED BY WILLIAM H.
PERRY, AND A SHERIFF'S DEED EXECUTED
PURSUANT TO THE FORECLOSURE OF THAT

15

MORTGAGE. THESE ASSIGNMENTS OF ERROR
ARE DISPOSED OF BY THE COURT ON PAGE
25 OF THE OPINION. THE COURT ERRED IN
DECIDING THAT THE PERRY MORTGAGE
AND THE SHERIFF'S DEED WERE ADMIS-
SIBLE IN EVIDENCE.

Perry, as the Opinion discloses, executed a mort-
gage to the Yavapai County Savings Bank. Neither
that bank nor the mortgage is mentioned in the in-
dictment or in the bill of particulars. The witness
Russell testified with respect to the mortgage and
the sheriff's deed. Perry did not testify and neither
did the sheriff. The defandants had no connection
whatever with the Yavapai County Savings Bank and
as far as the record discloses they never knew such a
bank existed. The effect of Russell's testimony was
to show, as the opinion discloses (Page 25), that the
property which was mortgaged by Perry to Yavapai
County Savings Bank was the same property de-
scribed in Exhibit 145, which was an exemplified
copy of a warranty deed executed by Arizona Holding
Corporation to A. E. Rayburn.

Here again, with respect to damaging testimony,
exemplified copies of instruments were introduced in
evidence, without the Government laying any founda-
jtion whatever for their admission.

But more than this, a fraudulent transaction was
! proved by records of a person and a bank over which

the defendants had no control or connection what-
jever. Insofar as this record discloses they never

knew that Perry had executed a mortgage to Yavapai
iCounty Saving Bank.

16

We submit, Your Honors, that these assignments
of error violate every reason supporting the rule
against hearsay evidence. We can conceive, as stated
by the Court, why it is not ''impressed with our
argument" (Opinion, page 25) but we are unable to
understand why the Court is not impressed with our
authorities (Appellants' Brief, pages 91 to 93). It
seems to us, in view of the assignments of error, and
the record, that it should be unnecessary to cite
authorities to support assignments of error that the
admission of testimony and evidence of this character
is violative of every reason for the rule against hear-
say evidence, particularly in criminal cases.

IV.

We have noted this statement of the Court:

"However puzzling may have proven some of
the problems presented in the preceding pages,
this particular argument (i.e., the sufficiency
of the evidence) precipitates no mystery. The
record overflows with proof of appellants' guilt."

Undoubtedly that appraisal by the Court has mag-
nified the difficulties which appellants have en-
countered to convince this Court that the misapplica-
tion of wholesome principles of law often require that
judgments be reversed notwithstanding guilt. If, as
we think is the case here, rules of evidence which
have long been recognized and often applied are to
be discarded, but if not discarded refined away, then
appellants are singularly deprived of rights which
they thought they could rely upon. We feel that the
errors which we have pointed out in this Motion for
a Rehearing are sufficiently substantial and import-
ant, at least to those who will follow, that this Court

17

should again re-examine the assignments of error per-
taining to them. It is not our purpose to request this
Court to again re-examine all the assignments of
error, and the whole brief in connection with them,
but we do believe that this Court has committed
fundamental error in the following respects:

(1) That it has misconstrued 28 USCA, Sec. 688,
by holding that the deeds, mortgages, and assign-
ments of mortgages, discussed in Subdivision I here-
of, were admissible in evidence.

(2) In deciding that the records of First National
Bank of Prescott, discussed in Subdivision II hereof,
were admissible in evidence, and that they were
harmless.

(3) In deciding that the Perry mortgage executed
to Yavapai County Savings Bank, and the Sheriff's
Deed on foreclosure thereof, and the testimony of the
witness Russell in relation thereto, discussed in Sub-
division III hereof, were admissible.

CONCLUSION

For all the foregoing reasons, it is respectfully con-
tended that a rehearing of this cause be granted and
that, if it comports with the wishes of the Court,
these appellants be permitted to brief additionally the
questions raised by this Motion for Rehearing, and
that they be permitted to have oral argument thereon.

Respectfully Submitted,

LESLIE C. HARDY,

LOUIS B. WHITNEY.
Attorneys for Appellants and
Petitioners.

18

No. 8781

IN THE

United States Circuit Court of Appeals

For the Ninth Circuit

Jesse H. Shreve and
Archie C. Shreve,

Appellants, \
vs.
United States of America,

Appellee.

APPLICATION FOR STAY OF ISSUANCE OF

MANDATE

TO THE HONORABLES, FRANCIS A. GAR-
RECHT, BERT EMORY HANEY, AND AL-
BERT LEE STEPHENS, JUDGES OF THE
UNITED STATES CIRCUIT COURT OF AP-
PEALS FOR THE NINTH CIRCUIT:

I.

That on the 18th day of April, 1939, this Honor-
able Court rendered and entered its opinion herein by
which it affirmed the judgment of the United States
District Court for the District of Arizona, from which
petitioners had duly and regularly appealed.

II.

That petitioners intend to and will petition the
Supreme Court of the United States for a Writ of
Certiorari to review the opinion and judgment of this
Honorable Court and will file said Petition for said
Writ of Certiorari in the Supreme Court of the

19

United States within thirty (30) days after the
entry of the judgment of this Honorable Court fol-
lowing the final determination of the Petition for
Rehearing which has been filed herein by the peti-
tioners in the event said Petition for Rehearing is
denied, and that they will in all respects comply with
the rules of the Supreme Court of the United States
regulating the filing of petitions for writs of certio-
rari therein.

III.

The undersigned counsel for petitioners believe
that good and sufficient reasons exist for the issu-
ance by the Supreme Court of the United States of
a Writ of Certiorari, in the event said Petition for
Rehearing is denied, and the final judgment of this
Court is rendered and entered, as said reasons are
provided by law and by the rules of the Supreme
Court of the United States.

WHEREFORE, petitioners pray that this Honor-
able Court stay its mandate herein until said Petition
for Rehearing is disposed of and said Petition for
Writ of Certiorari shall have been filed in the
Supreme Court of the United States.

Respectfully submitted,

LESLIE C. HARDY,

LOUIS B. WHITNEY.

Attorneys for Appellants and
Petitioners.

20

CERTIFICATE OF COUNSEL

We, the undersigned, counsel for appellants and
petitioners herein, do certify that in our opinion the
foregoing Petition for a Rehearing is well founded
and meritorious and that neither said petition or said
Application for Stay of Issuance of Mandate are in-
terposed for the purpose of delay.

LESLIE C. HARDY,

LOUIS B. WHITNEY.

Attorneys for Appellants and
Petitioners.

21

No. 8781

IN THE

United States Circuit Court of Appeals

For the Ninth Circuit

Jesse H. Shreve and
Archie C. Shreve,

Appellants, \
vs.
United States of America,

Appellee.

AFFIDAVIT OF JESSE H. SHREVE AND
ARCHIE C. SHREVE, APPELLANTS AND PETI-
TIONERS, IN SUPPORT OF APPLICATION FOR
STAY OF ISSUANCE OF MANDATE.

UNITED STATES OF AMERICA
STATE OF CALIFORNIA } ss.

COUNTY OF SAN DIEGO

JESSE H. SHREVE and ARCHIE C. SHREVE,

first being sworn, upon oath depose and say:

That they are the appellants and petitioners herein
and make and file this affidavit in support of their
Application for Stay of Issuance of Mandate herein.

Affiants depose and say that they, through their
counsel, Leslie C. Hardy, Esq. and Louis B. Whitney,
Esq., will file in the Supreme Court of the United
States a Petition for a Writ of Certiorari to review
the opinion of this Honorable Court rendered and
filed herein on the 18th day of April, 1939, in the
event their Petition for Rehearing filed herein is
denied and final judgment is entered herein affirm-

22

ing the judgment of the United States District Court
for the District of Arizona.

Affiants further depose and say that neither said
Petition for Rehearing, nor said Application for Stay
of Issuance of Mandate, nor said Petition for Writ of
Certiorari, in the event a Petition for Writ of Certio-
rari is filed in the Supreme Court of the United
States, are interposed for the purpose of delay,
but that they are interposed solely in order that af-
fiants may enforce the rights and remedies accorded
to them by the Constitution and laws of the United
States, the rules of this Court, and the rules of the
Supreme Court of the United States in order to pre-
serve their liberty.

JESSE H. SHREVE,

ARCHIE C. SHREVE.

Subscribed and sworn to before me this -..

day of May, 1939.

Notary Public
My commission expires:

Service of two copies of the within Petition for Re-
hearing, Stay of Issuance of Mandate, and Affidavit
of Jesse H. Shreve and Archie C. Shreve in support
of Application for Stay of Issuance of Mandate, is
admitted this day of May, 1939.

FRANK E. FLYNN,

United States Attorney.

By

No. 8768

Winittii States r

Circuit Court of Appeals!

ifor tfje iSintf) Circuit,

BEN A. BOST,

Appellant,

vs.

UNITED STATES OF AMERICA,

Appellee.

^rauHcript of EccortJ

Upon Appeal from the District Court of the United

States for the Northern District of California,

Southern Division

OCi ;^ 5 1938

3: n'RRiicM

PARKER PRINTING COMPANY. S45 SANSOME STREET. SAN FRANCISCO

No. 8768

VAnittb States:

Circuit Court of appeals!

Jfor tfie i^intf) Circuit.

BEN A. BOST,

Appellant,
vs.

LTNITED STATES OF AMERICA,

Appellee.

tB^rauacript of Betorb

Jpon Appeal from the District Court of the United
States for the Northern District of California,
Southern Division

PARKER PRINTING COMPANY. SAB SANSOME STREET. SAN FRANCISCO

INDEX.

[Clerk's Note: When deemed likely to be of an important nature,
errors or doubtful matters appearing in the original certified record are
printed literally in italic; and, likewise, cancelled matter appearing in
tlie original certified record is printed and cancelled herein accordingly.
When possible, an omission from tlie text is indicated by printing in
italic the two words between which the omission seems to occur.]

Page

Arraignment 24

Assignment of errors 167

Bill of exceptions 48

Witnesses for Defendant :
Arbogast, C. S.

—direct 1 17

— cross 117

— redirect 117

Bost, Ben A.

— direct 118

— cross 123

— redirect 144

— recross 145

Chapman, C. W.

— direct 11 5

— cross 116

Holmes, A. M.

— direct 113

— cross 114

Zannoco, J.

— direct 118

— cross 118

— ^redirect 1 18

ii nr)i A. Bost vs.

Index Paj^e

Witnesses for Plaintiff:

Ackley, J. C.

— direct 93

— cross 93

— redirect 94

Bones, Lawrence

— direct 76

— cross 77

Bongard, John

— di rect 107

— cross 109

— redirect 112

Campbell, William

— direct 84

— cross 85

Collins, Clarence

—direct 77

— cross 78

— redirect 78

Gray, Charles W.

— direct 49

Hastings, H. L.

— direct -^0

— recalled, direct 69

Lahiff, Henry

—direct 90

No. 8768

Wlnitth States;

Circuit Court of Mppmh

Jfor tde ^intb Circuit.

BEN A. BOST,

Appellant,

vs.

UNITED STATES OF AMERICA,

Appellee.

tEraitHcript of I^ecorti

Upon Appeal from the District Court of the United

States for the Northern District of California,

Southern Division

PARKEP PRINTING COMPANY S45 SANSOME STREET. SAN FRANCISCO

INDEX.

[Clerk's Note: When deemed likely to be of an important nature,
errors or doubtful matters appearing in the original certified record are
printed literally in italic: and, likewise, cancelled matter appearing in
the original certified record is printed and cancelled herein accordingly.
When possible, an omission from the text is indicated by printing in
italic the two words between which the omission seems to occur.]

Page

Arraignment 24

Assignment of errors 167

Bill of exceptions 48

Witnesses for Defendant :
Arbogast, C. S.

— direct 117

— cross 117

— redirect 117

Bost, Ben A.

—direct 118

— cross 123

— redirect 144

— recross 145

Chapman, C. W.

— direct 115

— cross 116

Holmes, A. M.

—direct 113

— cross 114

Zannoco, J.

— direct 118

— cross 118

— redirect 118

ii firn A. Bost vs.

Index Page

Witnesses fov Plaintiff:

Ackley, J. C.

— direct 93

— cross 93

— redi rect 94

Bones, Lawrence

— direct 76

— cross 77

BoTigard, John

— direct 107

— cross 1 09

— redirect 112

Campbell, William

— direct 84

— cross 85

Collins, Clarence

—direct 77

— cross 78

— redirect 78

Gray, Charles W.

— direct 49

Hastings, H. L.

— direct -^O

— recalled, direct 69

Lahiff, Henry

—direct 90

United States of America iii

Index Page

Witnesses fov Plaintiff (Continned) :

Laizure, Clyde M.

— direct 104

— cross 105

— redirect 106

Loftns, Andrew J.

— direct 50

Lynn, R. C.

— direct 56

— direct, resumed 71

— cross 71

— recalled, direct 147

— cross 147

— redirect 148

McGlasham, Harry D.

— direct 53

— cross 55

— redirect 55

Mobley, Walter L.

— direct 55

Murdock, Robert

— direct 82

— cross 83

— ^redirect 83

Ogle, Elmer C.

— direct 79

iv Ben A.Bostvs.

Index Page

Witnesses for Plaintiff (Continued) :

Raines, Edward N.

— direct 85

— cross 88

— redirect 88

Rich, Charles B.

— direct 96

— cross 101

— redi rect 102

— recross 102

Sartor, Francis

— direct 94

— cross 95

Scott, E. L.

— direct 89 ,

Sedelmeyer, H. C.

— direct 51

— cross 53

Shields, John A.

— direct 91

— cross 92

Clerk 's certificate 1 87

Co])y of order of Circuit Court of Appeals ex-
tending time to file bill of exceptions 46

Demurrer 25

United States of A m erica v

Index Page
Indictment 1

Judgment 42

Minutes of trial, Nov. 23, 1937 33

'* " " Nov. 24, 1937 35

'' " Nov. 26, 1937 36

Motion for new trial 38

Names and Addresses of Attorneys 1

Notice of appeal 164

Order denying motion for new trial 39

Order overmling demurrer 32

Order to transfer original exhibits 184

Plea of defendant 32

Praecipe 185

Statement of docket entries 187

Stipulation to transfer original exhibits 183

Verdict 36

United States of America iii

Index Page

Witnesses for Plaintiff (Continned) :

Laizure, Clyde M.

— direct 104

— cross - 105

— redirect 106

Loftus, Andrew J.

— direct 50

Lynn, R. C.

— direct 56

— direct, resumed 71

— cross 71

— recalled, direct 147

— cross 147

— redirect 148

McGlasham, Harry D.

— direct 53

— cross 55

— redirect 55

Mobley, Walter L.

— direct 55

Murdock, Robert

— direct 82

— cross 83

— redirect 83

Ogle, Elmer C.

— direct 79

iv Be7i A. Bostvs.

Index Pa.ue

Witnesses for Plaintiff (Continued) :

Raines, Edward N.

— direct 85

— cross 88

— redirect 88

Rich, Charles B.

—direct 96

— cross 101

— redirect 102

— recross 102

Sartor, Francis

— direct 91

— cross 95

Scott, E. L.

—direct 89

Sedelmeyer, H. C.

— direct 51

— cross 53

Shields, John A.

— direct 91

— cross 92

Clerk 's certificate 1 87

Copy of order of Circuit Court of Appeals ex-
tending time to file bill of exceptions 46

Demurrer 25

a a li

n a it

TJn ited States of A m erica v

Index Page
Indictment 1

Judgment 42

Minutes of trial, Nov. 23, 1937 33

Nov. 24, 1937 35

Nov. 26, 1937 36

Motion for new trial 38

Names and Addresses of Attorneys 1

Notice of appeal 164

Order denying motion for new trial 39

Order overruling demurrer 32

Order to transfer original exhibits 184

Plea of defendant 32

Praecipe 185

Statement of docket entries 187

Stipulation to transfer original exhibits 183

Verdict 36

NAMES AND ADDRESSES OE ATTORNEYS.

JAMES M. HANLEY, Esq.,
210 Post St.,

San Francisco, Calif.
RAY T. COUGHLIN, Esq.,
ROBERT A. ZARICK, Esq.,
507 Biyte Bldg.,

Sacramento, Calif.

Attorneys for Defendant and Appellant.

FRANK J. HENNESSY, Esq.,

U. S. Attorney, Northern District of California,
Post Office Bldg.,

San Francisco, Calif.
Attorney for Plaintiff and Appellee.

No. 25961-S.

IN THE SOUTHERN DIVISION OF THE
UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF CALI-
FORNIA.

First Count: (18 U. S. C. A. Sec. 80) ;

In the March 1937 term of said Division of said
District Court, the Graud Jurors thereof, on their
oaths present:

I. Th-t BEN A. BOST on or about the 6th day
of April, 1934, at San Francisco, California, in
said Divi^^iou nud District, kuowiugly nud wilfully
falsified, eoucenled aud covered up by a trick,
sHirmo nud device, n umterinl matter withii^ the

2 Ben A. Bost vs.

jurisdiction of a department and agency of the
United States, all as hereinafter set forth.

II. Under the regulations duly issued and pro-
mulgated by the Secretary of the Treasury on Jan-
uary 31, 1934, under and pursuant to the authoriza-
tion given under the provisions of the "Gold Re-
serve Act of 1934", it was at all times herein men-
tioned provided that the United States Mints shall
not purchase any gold recovered from natural de-
posits in the United States or any place subject to
the jurisdiction thereof and which gold shall not,
at the time of its purchase, have [1*] entered into
monetary or industrial use, unless such gold is
accompanied by a properly executed affidavit in the
form therein prescribed. Under said regulations it
was at all of said times further provided therein
that persons offering gold of the kind above
described to the Mint for sale, shall execute and
present to the Mint with said gold so offered, an
affidavit on a form prescribed by said Regulations;
that in the case of gold so tendered for sale and
so deposited by persons who have recovered said
gold by mining or panning, said regulations require
that the affidavit to be used and executed is an
affidavit therein referred to as being on Form "TO
19" which said form is supplied by the Mint to all
persons who offer such gold to a United States Mint
for sale. That said form of affidavit "TG 19" pro-
vides that all persons who offer such gold to any
United States Mint for sale shall set forth therein

•Papp numberinp appearing at the foot of paee of ori^nal certified
TraiiBcript of Record.

United States of America 3

certain information, including the source of said
gold and the name and location of the mine or
placer deposit from which said gold has been re-
covered.

III. That on or about the 6th day of April, 1934,
said defendant requested of the Mint of the United
States, located at San Francisco, California, which
was then and there an agency of the Treasury De-
partment of the United States, that it purchase
certain gold that was then and there tendered by
him to said Mint for sale; that for the purpose of
inducing said Mint to purchase said gold, and in
purported compliance with said regulations above
mentioned, said deposit of gold was accompanied
by an affidavit executed by said defendant, a copy
of Avhich affidavit is hereunto annexed, marked Ex-
hibit "A", and made a part hereof; that in and by
the terms of said affidavit, said defendant wilfully,
knowingly and unlawfully, and contrary to his oath
in said affidavit taken, declared, certified and swore
to certain material matters which were not [2] true
and which he did not believe to be true when he
swore to said affidavit, to-wit: That he was the
owner of a mining claim called the "TAicky Gravel"
claim, and that the source of said gold so tendered
and deposited was *' Lucky Gravel claim, mostly
small nuggets", and that said gold had been recov-
ered from said claim, which claim it wns stnted in
said affidavit was located in Cougnr Cnnvor!, Eldo-
rn'l^^ rmmty. California, whereas in truth and in
fact ns said defendnnt tb^i nnd ih^ro woU I-^^av,

4 Ben A. Bost vs.

he was not the owner of any mining claim in said
Comity and State, known as or called the Lucky
Gravel claim, and whereas in truth and in fact the
source of said gold was not said Lucky Gravel
claim, and said gold had not been recovered from
said alleged claim, which facts said defendant at all
times well knew.

Second Count: (18 U. S. C. A., 80.)

And the said Grand Jurors on their oaths afore-
said, do further present:

I. That Ben A. Bost, on or about the 17th day
of May, 1934, at San Francisco, California, in said
Division and District, knowingly and wilfully falsi-
fied, concealed and covered up by a trick, scheme
and device, a material matter within the jurisdic-
tion of a department and agency of the United
States, all as hereinafter set forth.

II. The Grand Jurors do hereby adopt the
allegations of paragraph II of the First Count of
this Indictment and do hereby make the same a
part, hereof as fully as if the same were set out
herein.

III. That on or about the 17th day of May,
1934, said defendant requested of the Mint of the
ITnited States, located at San Francisco, California,
which was then and there an agency of the Treasury
Department of the ITnited States, that [3] it pur-
chase certain gold that was then and there tendered
bv him to said Mint for sale: that for the purpose
of inducing said Mint to -purchase snid gold, and in
purported compliance with said resn^lations above

United States of America 5

mentioned, said deposit of gold was accompanied
by an affidavit executed by said defendant, a copy
of which affidavit is hereunto annexed, marked Ex-
hibit "B", and made a part hereof; that in and by
the terms of said affidavit, said defendant wilfully,
knowingly and unlawfully, and contrary to his oath
in said affidavit taken, declared, certified and swore
to certain material matters which were not true and
which he did not believe to be true when he swore
to said affidavit, to-wit : That he was the owner of a
mining claim called ''The Lucky Gravel Claim,"
and that the source of said gold so tendered and
deposited was "gravel gold, small nuggets", and
that said gold had been recovered from said claim,
which claim it was stated in said affidavit was
located in Cougar Canyon, El Dorado County, Cali-
fornia, w^hereas in truth and in fact, as said defend-
ant then and there well know, he was not the o-\^Tier
of any mining claim in said County and State,
known as or called "The Lucky Gravel Claim", and
v.liereas in truth and in fact the source of said gold
was not said "Lucky Gravel Claim", and said gold
had not been recovered from said alleged claim,
which said facts said defendant at all times well
knew. !

Third Count: (18 U. S. C. A., 80.)

And the said Grand Jurors on their oaths afore-
said do further present :

I. That Ben A. Bost, on or about the 18th day
of April, 1935, at San Francisco, California, in said
Division and District, knowingly and wilfully falsi-

6 Bcji A. Bost vs.

fied concealed and covered up by a trick, scheme
and device, a material matter within tlie jurisdic-
tion of a [4] department and agency of the United
States, all as hereinafter set forth.

II. The Grand Jurors do hereby adopt the
allegations of paragraph II of the First Count of
this Indictment and do hereby make the same a part
hereof as fully as if the same were set out herein.

III. That on or about the 18th day of April,
1935, said defendant requested the Mint of the
United States, located at San Francisco, California,
which was then and there an agency of the Treasmy
Department of the United States, that it purchase
certain gold that was then and there tendered by
him to said INfint for sale; that for the purpose of
inducing said Mint to purchase said gold, and in
purported compliance with said regulations above
mentioned, said deposit of gold was accompanied l^y
an affidavit executed by said defendant, a copy of
which affidavit is hereunto annexed, marked Exhibit
''C", and made a part hereof; that in and by the
terms of said affidavit, said defendant aviI fully,
loiowingly, and m^la^^^ully, and contrary to his
oath in said affidavit taken, declaimed, certified and
swore to certain material matters which were not
true and which he did not believe to be true when ho
swore to said affidavit, to-wit: Tliat he Avas the
owner of a mining claim called *'The Lucky Gravel
Claim", and that the source of said gold so tendered
and deposited was said ''Lucky Gravel Claim", nnd
that said gold had been recovered from snid clnim

United States of America 1

in Cougar Canyon, El Dorado County, California,
whereas in truth and in fact as said defendant then
and there well knew, he was not the owner of any
mining claun in said County and State, known as
or called "The Lucky Gravel Claim", and whereas
in truth and in fact the source of said gold was not
said "Lucky Cravel Claim", and said gold had not
been recovered from said alleged claim, which said
facts said defendant at all times well knew. [5]

Fourth Count: (18 U. S. C. A., 80.)

And the said Grand Jurors on their oaths afore-
said, do further present:

I. That Ben A. Bost, on or about the 20th day of
January, 1935, at San Francisco, California, in said
Division and District, knowingly and wilfully falsi-
fied, concealed and covered up by a trick, scheme
and device, a material matter within the jurisdic-
tion of a department and agency of the United
States, all as hereinafter set forth.

II. The Grand Jurors do hereby adopt the
allegations of paragraph II of the First Count of
this Indictment, and do hereby make the same a
part hereof as fully as if the same were set out
herein.

III. That on or about the 20th day of January,
1935, said defendant requested of the Mint of the
United States, located at San Francisco, California,
which was then and there an agency of the Trea-
sury Department of the United States, that it pur-
chase certain gold that was then and there tendered
by him to said Mint for sale; that for the purpose

8 Ben A. Bost vs.

of inducing said Mint to purchase said gold, and in
purported compliance with said regulations above
mentioned, said deposit of gold was accompanied by
an affidavit executed by said defendant, a copy of
Avhich affidavit is hereunto annexed, marked Exhibit
''D", and made a part hereof; that in and by the
terras of said affidavit, said defendant wilfully,
knowingly and unlawfully, and contrary to his oath
in said affidavit taken, declared, certified, and swore
to certain material matters which were not true and
which he did not believe to be true when he swore
to said affidavit, to-wit: that he was the owner of
a mining claim called "The Lucky Gravel Claim,"
and that the [6] source of said gold so tendered and
deposited was "gravel, some nuggets", and that said
gold had been recovered from said "Lucky Gravel
Claim" in Cougar Canyon, El Dorado County, Cali-
fornia, whereas in ti'uth and in fact, as said (de-
fendant then and there well knew, he was not the
owner of any mining claim in said County and
State, known as or called "The Lucky Gravel
Claim", and whereas in truth and in fact the source
of said gold was not said "Lucky Gravel Claim"
and said gold had not been recovered from said
alleged claim.

Fifth Count: (18 U. S. C. A., 80.)

And the said Grand Jurors on their oaths afore-
said, do further present :

I. That Ben A. Bost, on or about the 27th day
of July, 1934, at San Francisco, California, in said

Vmfecl States of America ^

Division and District, knowingly and wilfully falsi-
fied, concealed and covered np by a trick, scheme
and device, a material matter within the jurisdic-
tion of a department and agency of the United
States, all as hereinafter set forth.

II. The Grand Jurors do hereby adopt the
allegations of paragraph II of the First Coimt of
this Indictment and do hereby make the same a part
hereof as fully as if the same were set out herein.

III. That on or about the 27th day of July, 1934,
said defendant requested of the Mint of the United
States, located at San Francisco, California, which
was then and there an agency of the Treasury De-
partment of the United States, that it purchase
certain gold that was then and there tendered by
him to said Mint for sale ; that for the purpose of
inducing said Mint to purchase said gold, and in
purported compliance with said regulations above
niPTitioned, said deposit of gold [7] was accoinpanied
by a purported affidavit which purported to have
been executed by said defendant, a copy of which
affidavit is hereunto annexed, marked Exhibit "E"
and made a part hereof, that in and by the terms
of said purported affidavit, said defendant wilfully,
knowingly and unlaw^fully declared and certified
and purported to swear to certain material matters
which were not true, to-wit : that he was the owner
of a mining claim called "The Lucky Gravel Claim"
in Cougar Canyon, El Dorado Coimty, California,
and that the source of said gold so tendered and
deposited was '^ gravel", and that said gold had

10 Ben A. Bost vs.

been recovered from said claim, whereas in truth
and in fact, as said defendant then and there well
knew, he was not the owner of any mining claim in
said County and State, known as or called ''The
Lucky Gravel Claim", and whereas in truth and in
fact, the source of said gold was not said "Lucky
Gravel Claim," and said gold has not been recov-
ered from said alleged claim.

H. H. McPIKE,

United States Attorney.

Approved as to form:
RMcW. [8]

EXHIBIT "A"
7779
TG-19

Treasury Department
Office of the Secretary.

AFFIDAVIT ACCOMPANYING DEPOSITS
BY PERSONS WHO HAVE RECOVERED
GOLD BY MINING OR PANNING.

State of California
County of Nevada — ss.

I, Ben A. Bost (name) of Nevada City, Cali-I
fornia (address) being first duly sworn on oath
depose and say that I am the OwTier of Lucky
Gravel Claim (title of officer executing affidavit) ofj
Ben A Bost, Nevada City, Calif, (name and address]
of depositor) the depositor of the gold described'
below; that I have personal knowledge of all the

United States of America 11

facts concerning said gold as set forth in this
affidavit ;

A. Name and address of depositor is Ben A.
Bost, Nevada City, California.

B. Description of shipment of gold delivered is
one bar gold bullion.

C. Net weight of this shipment in troy ounces is
102.55.

D. Assay or estimated fineness in parts per 1000
is 850.

E. Content of fine gold in troy ounces is 87.70
(estimate if necessary).

F. The U. S. Mint or Assay office to which ship-
ped is Mint at San Francisco.

G. The date shipped is April 5, 1934.

H. The source of the gold is Lucky Gravel Claim
mostly small nuggets (State whether ore, tailing, or
placer, etc.).

I. The tons of ore or tailings, or cubic yards of
gravel from which this shipment was recovered are
about 200 cubic yards.

J. The period within which the gold was taken
from the mine or placer deposit is October 1, 1933 to
March 31, 1934.

K. The name and location of mine or placer
deposit from which the gold was recovered is Lucky
Gravel Claim, Cougher Canyon, Eldorado Co., Calif.

L. The date such gold was first melted into crude
metallic gold suitable for refining at a gold refinery
is April 5, 1934.

M. The date such gold w-as converted into the
form in which presented is April 5, 1934.

12 Bc7i A. Bost vs.

The gold referred to herein was recovered by this
depositor by mining or panning and no part thereof
has been held by this depositor or to the best of my
knowledge, information and belief, by any other
person at any time in noncompliance with the Act
of March 9, 1933, any executive order or orders of
the Secretary of the Treasury issued thereunder, or
in noncompliance with any regulations prescribed
under such order or license issued pursuant thereto,
or in noncompliance \\dth the Gold Reserve Act of
1934, or any regulations or license issued there-
under. No part of such gold has ever entered into
monetary or industrial use.

I make this affidavit for the purpose of inducing
the purchase by a United States Mint or assay Of-
fice of gold described herein under and in accord-
ance with the provisions of the Gold Reserve Act of
1934 and the regulations issued thereunder.
BEN A. BOST
By

Subscribed and sworn to before me this 5th day
of April 1934.
[Seal] W. L. MOBLEY

(Officer administering oath.)

My commission expires Nov. 7th, 1934.

(To be executed in duplicate.) [9]

United States of America IS

EXHIBIT ''B"
11630
TG-19

Treasury Department
Office of the Secretary.

AFFIDAVIT ACCOMPANYING DEPOSITS
BY PEKSONS WHO HAVE RECOVERED
GOLD BY MINING OR PANNING.

State of California
County of Nevada — ss.

I, Ben A. Bost (name) of Nevada City, Califor-
nia (address) being first duly sworn on oath depose
and say that I am the owner of Lucky Gravel Claim
(title of officer executing affidavit) of Ben A. Bost,
Nevada City, Calif, (name and address of depositor)
the depositor of the gold described below; that I
have personal knowledge of all the facts concerning
said gold or set forth in this affidavit;

A. Name and address of depositor is Ben A.
Bost, Nevada City, California.

B. Description of shipment of gold delivered is
one bar gold bullion.

C. Net weight of this shipment in troy ounces
is 79.50.

D. Assay or estimated fineness in parts per 1000
is 850.

E. Content of fine gold in troy ounces is 67.30
(estimate if necessary).

F. The U. S. Mint or Assay office to which
shipped is Mint at San Francisco.

14 Ben A.Bostvs.

G. The date shipped is May 16, 1934.

H. The source of the gold is gravel gold, small]
nuggets, (state whether ore, tailing, or placer, etc.^

I. The tons of ore or tailings, or cubic yards ofl
gravel from which this shipment was recovered are
about fifty tons.

J. The period within which the gold was takei
from the mine or placer deposit is during the months
of April and May, 1934.

K. The name and location of mine or i^lacer
deposit from which the gold was recovered is Lucky
Gravel Claim, Cougher Canyon, Eldorado Co., Calif.

L. The date such gold was first melted into
crude metallic gold suitable for refining at a gold
refinery is May 15, 1934.

M. The date such gold w^as converted into the
form in which presented is May 15, 1934.

The gold referred to herein was recovered by this
depositor by mining or panning and no part there-
of has been lield by this depositor or to the best
of my knowledge, information and belief, by any
other person at any time in noncompliance with the
Act of March 9, 1933, any executive order or orders
of the Secretary of the Treasury issued thereunder, |
or in noncompliance with any regulations prescribed
under such order or license issued pursuant thereto,
or in noncompliance with the Gold Reserve Act of
1934, or any regulations or license issued thereunder.
No part of such gold has ever entered into monetary
or industrial use.

United States of America 15

I make this affidavit for the purpose of inducing
the purchase by a United States Mint or assay Office
of gold described herein under and in accordance
with the provisions of the Gold Reserve Act of 1934
and the regulations issued thereunder.
By BEN A. BOST

Subscribed and sworn to before me this 16th day
of May 1934.
[Seal] W. L. MOBLEY

(Officer administering oath)

My commission expires Nov. 7th, 1934.

(To be executed in duplicate). [10]

EXHIBIT ''C"
22564

AFFIDAVIT ACCOMPANYING DEPOSITS
BY PERSONS WHO HAVE RECOVERED
GOLD BY MINING OR PANNING.

State of California
County of Nevada — ss.

I, Ben A. Bost (name) of Nevada City, Calif,
(address) being first duly sworn on oath depose
and say that I am the owner of Lucky Gravel Claim,
Eldorado Co. (title of officer executing affidavit)
of Ben A Bost, Nevada City, Calif, (name and
address of depositor) the depositor of the gold
described below; that I have personal knowledge of
all the facts concerning said gold as set forth in
this affidavit.

16 Ben A. Bost vs.

A. Name and address of depositor is Ben A.
Bost, Nevada City, Calif,

B. Description of shipment of gold delivered is
sponge gold bullion.

C. Net weight of this shipment in troy ounces
is 124.25.

D. Assay or estimated fineness in parts per 1000
is 853.

E. Content of fine gold in troy ounces is 106.00
(estimate if necessary).

F. The U. S. Mint or Assay Office to which ship-
ped, is San Francisco Mint.

Depositor is holder of Treasury License TGL

serial No (Fill out the

order below if payment is to be made to other than

depositor.)

Superintendent, U. S. Mint, San Francisco, Calif.

Sir: Make payment for the above deposit to

whose address is

These instructions are irrevocable. I hereby accept

Mint scales wei ght

(depositor).

(Be sure to complete other side of this form.)

G. The date shipped is April 17, 1935.

H. The source of gold is Lucky Gravel Claim,
gravel gold (state whether ore, tailing, placer, etc.).

I. The tons of ore tailing, or cubic yards of
gravel from which this shipment was recovered are
about 160 tons, some nugets.

United States of America 17

J. The period within which the gold was taken
from the mine or placer deposit is during Jan.,
I Feb., Mar., and April, 1935.

K. The name and location of mine or placer
from which the gold was recovered is Lucky Gravel
Claim, Coughar Canyon, Eldorado Co., Calif.

L. The date such gold was first melted into
crude metallic gold suitable for refining at a gold
refinery is 193

M. The date such gold was converted into the
form in which presented is April 16, 1935.

The gold referred to herein was recovered by
this depositor by mining or panning and part thereof
has been by this depositor or to the best of my
knowledge, information and belief, by any person
at any time in noncompliance with Act of March 9,
\ 1933, any Executive Order or Orders of the Secre-
tary of the Treasury issued thereunder or in non-
compliance with any regulations prescribed under
such order or license issued pursuant thereto, or in
noncompliance with the Gold Reserve Act of 1934,
or any regulations or license issued thereunder. No
part of such gold has ever entered into monetary or
industrial use.

I make this affidavit for the purpose of inducing
the purchase by a United States Mint or Assay
Office of gold described hereinunder and in accord-
ance with the provisions of the Gold Reserve Act
of 1934 and the regulations issued thereunder.

18 Ben A. Bost vs.

Depositor must sign here

BEN A. BOST
By - -

Subscribed and swoni to before me this 17th day
of April, 1935.

W. L. MOBLEY

My Commission expires Nov. 7th, 1935.

Execute this form in duplicate. Deposits of less
than 5 gross ounces need not be sworn to, but those
of over 5 gross ounces must be sworn to. [11]

EXHIBIT "D"
16476
AFFIDAVIT ACCOMPANYING DEPOSITS
BY PERSONS WHO HAVE RECOVERED
GOLD BY MINING OR PANNING.

State of California,
County of Nevada — ss.

I, Ben A. Bost (name) of Nevada City, Califor
nia (address) being first duly sworn on oatli de-
pose and say that I am the owner of Lucky Grani
claim (title of officer executing affidavit) of Ben
A. Bost, Nevada City, Calif, (name and address of
depositor) the depositor of the gold described be
low ; that I have personal knowledge of all the facts
concerning said gold as set forth in this affidavit

A. Name and address of depositor is Ben A,
Bost, Nevada City, Calif.

B. Description of shipment of gold delivered is
gold bullion sponge.

I

i

United States of America 19

C. Net weight of this shipment in troy ounces
is 97.00.

D. Assay or estimated fineness in parts per 1000
is 848.

E. Content of fine gold in troy ounces is 82.50
(estimate if necessary) .

F. The U. S. Mint or Assay Office to which
shipped, is San Francisco Mint.

Depositor is holder of Treasury License TGL
serial No

(Fill out the order below if payment is to be made
to other than depositor).

Superintendent, U. S. Mint, San Francisco, Calif.

Sir: Make payment for the above deposit to

whose address is

; These instructions are irrevocable. I hereby accept

tMint scales weight. (depositor).

■(Be Sure to Complete Other Side of This Form)
' G. The date shipped is Jan. 19, 1935.
: H. The source of gold is gravel, some nugets.
! (state whether ore, tailing, placer, etc.)

I. The tons of ore tailing, or cubic yards of
gravel from which this shipment was recovered are
about three hmidred tons.

J. The period within which the gold was taken
I from the mine or placer deposit is during Sept.,
iOct., Nov. & Dec, 1934.

K. The name and location of mine or placer from
which the gold was recovered i& Lucky Gravel claim,
Coughar Canyon, Eldorado Co., California.

20 BenA.Bostvs.

L. The date such gold was first melted into crude
metallic gold suitable for refining at a gold refinery
is , 193

M. The date such gold was converted into the
form in which presented is Jan. 18, 1935.

The gold referred to herein was recovered by this
depositor by mining or panning and part thereof has
been by this depositor or to the best of my knowl-
edg.9, information and belief, by any person at any
time in noncompliance with Act of March 9, 1933,
any Executive Order or Orders of the Secretary of
the Treasury issued thereunder or in noncompliance
with any regulations prescribed under such order
or license issued pursuant thereto, or in noncompli-
ance wath the Gold Reserve Act of 1934, or any
regulations or license issued thereimder. No part
of such gold has over entered into monetary or
industrial use.

I make this affidavit for the purpose of inducing
the purchase by a United States Mint or Assay
Office of gold described hereinunder and in accord-
ance with the provisions of the Gold Reserve Act
of 1934 and the regulations issued thereunder.

Depositor Must Sign Here.

BEN A. BOST
By

Subscribed and sworn to hefor me this 19 day
of Jan., 1935.

My Commission expires Nov. 7th, 1935.

WALTER L. MOBT.EY

United States of America 21

Execute this form in duplicate. Deposits of less
than 5 gross ounces need not be sworn to, but those
of over 5 gross ounces must be sworn to. [12]

EXHIBIT ''E"

2917 Duplicate
Form TG-19, Treasury Department, Office of the

Secretary

AFFIDAVIT ACCOMPANYING DEPOSITS
BY PERSONS WHO HAVE RECOVERED
GOLD BY MINING OR PANNING.

State of California,

t County of Eldorado — ss.

I

I, Ben A. Bost (Name) of Nevada City, Calif.
j (address) being first duly sworn on oath depose
and say that I am the owner of Lucky Gravel Claim
j (Title of officer executing affidavit) of Coughar
Canyon, Eldorado Co., Calif. (Name and address
of depositor) the depositor of the gold described
below; that I have personal knowledge of all the
facts concerning said gold as set forth in this affi-
davit.

A. Name and address of depositor is Ben A.
Bost, Nevada City, California.

B. Description of shipment of gold delivered is
Sponge Gold Bullion, some nuggets.

C. Net weight of this shipment in troy ounces
is 120.50 oz.

D. Assay or estimated fineness in parts per 1000
is 856.

E. Content of fine gold in troy ounces is 103.20
(Estimate if necessary).

22 Be7i A. Bost vs. ^

F. The U. S. Mint or Assay office to which
shipped, is San Francisco Mint.

Depositor is holder of Treasury License TGL^
serial No

(Fill out the order below if payment is to b^
made to other than depositor)
Superintendent, IT. S. Mint, San Francisco, Calif.

Sir: Make payment for the above deposit to

whose address is

Those instructions are irrcA'ocable. I hereby accept
Mint scales weight.

(Depositor)
(Be Sure to Complete Other Side of This Form)

G. The date shipped is July 26, 1934.

H. The source of the gold is Gravel (State
whether ore, tailing, placer, etc.)

I. The tons of ore or tailings, or cul)ic yards of
gravel from which this shipment w^as recovered are
about 100 Cubic Yards.

J. Tlie ])eriod within which the gold was taken
from the mine or placer deposit is during months',
of June and July, 1934.

Tv. The name and location of mine or placer'
deposit from which the gold was recovered is Lucky
Gravel Claim, Eldorado Co., Calif.

L. The date such gold was first melted into crude
metallic gold suitable for refining at a gold refinery
is , 193

M. The date such gold was converted into the
form in which presented is July 23, 1934.

The gold referred to herein was recovered by this
depositor by mining or panning and no part thereof

n

isj

1 United States of America 23

'has been held by this depositor or to the best of my
knowledge, information and belief, by any other
person at any time in noncompliance with the Act
of March 9, 1933, any Executive Order or Orders
of the Secretary of the Treasury issued thereunder
[or in noncompliance with any regulations prescribed
junder such order or license issued pursuant thereto,
jor in noncompliance with the Gold Reserve Act of
1934, or any regulations or license issued thereun-
jder. No part of such gold has ever entered into
imonetary or industrial use.

I make this affidavit for the purpose of inducing
the purchase by a United States Mint or Assay
Office of gold described hereinunder and in accord-
,ance with the provisions of the Gold Reserve Act
of 1934 and the regulations issued thereimder.

Depositor Must Sign Here.

BEN A. BOST
By

Subscribed and sworn to before me this 26 day
of July, 1934.

W. L. MOBLEY

Notary Public

I My Commission expires Nov. 7th, 1934.

I Execute this form in duplicate. Deposits of less
than 5 gross ounces need not be sw-orn to, but those
of over 5 gross ounces must be sworn to. [13]
I [Endorsed] : A true bill, Leon H. Enemark, Fore-
man. Presented in open court and ordered filed
Mar. 30, 1937. [14]

24 Ben A. Bost vs.

District Court of the United States, Northern
District of California, Soiithem Division

At a Stated Term of the Southern Division of
the United States District Court for the Northern
District of CaHfornia, held at the Court Room
thereof, in the City and County of San Francisco,
on Saturday, the 1st day of May, in the year of our '
Lord one thousand nine hundred and thirty-seven.

Present: The Honorable A. F. St. Sure, District
Judge.

No. 25961.

UNITED STATES OF AMERICA,

vs.

BEN A BOST.

This case came on regularly this day for arraign-
ment of defendant Ben A. Bost, who was present
with Attorney, Ray Coughlan, Esq. V. C. Hammack,
Assistant U. S. Attorney, was present for and on
behalf of the United States. Defendant was duly,!
arraigned, stated true name to be as contained in
Indictment, waived formal reading thereof, and
thereupcm filed a Demurrer to the Indictment andl
Motion for Bill of Particulars. After hearing At-
torneys, ordered hearing on said Demurrer and
Motion and also the matter of entry of plea be and
the same are hereby continued to May 8, 1937. [15]

United States of America 25

[Title of District Court and Cause.]

DEMURRER

Comes now the defendant, Ben A. Bost, above
named, and demurs to the Indictment on file herein,
and alleges as follows :

I.

The facts set forth in the First Count do not state
facts sufficient to constitute an offense against the
United States.

II.

That it does not appear in said Indictment, in the
First Count thereof, nor can it be ascertained there-
from, whether this defendant is charged with a vio-
lation of the provisions of Section 80 of Title 18 of
the United States Criminal Code, or a violation of
the Gold Reserve Act of 1934.

III.

That it does not appear in said First Count of
the Indictment, nor can it be ascertained therefrom
how or in what manner this defendant attempted
to or did defraud the Government of the United
States or any Department thereof.

IV.

That it does not appear in said Indictment, in
I the First Count thereof, that this defendant pre-
jsented any claim upon or against the Government
I of the United States, or any Department or officer
I thereof, or any corporation in which the United
States of America is a stock holder.

26 Bc7i A. Bost vs.

V.

That it does not appear in said Indictment, in the
First Count thereof, that this defendant made or
caused to be made or presented or caused to be pre-
sented any claim for payment or approval to or by
any person or officer in the civil, military or naval
service of the United States, or any department
thereof, or any corporation in which the United
[16] States of America is a stock holder.

I

i

VI.

That it does not appear in said Indictment, in
the First Count thereof, that this defendant made,
caused to be made or presented or caused to be pre-
sented a claim to any person or officer of the Gov-
ernment of the United States having authority to
allow and approve such claim. ■I

Demurring to the second count of said indictment,
defendant specifies as follows:

I.

The facts set forth in the Second Coimt do not
state facts sufficient to constitute an offense against
the United States.

11.

That it does not appear in said Indictment, ii
the Second Count thereof, nor can it be ascertaine(
therefrom, whether this defendant is charged witl
a violation of the provisions of Section 80 of Title^
18 of the United States Criminal Code, or a viola-
tion of the Gold Reserve Act of 1934.

United States of America 27

III.

That it does not appear in said Second Count of
the Indictment, nor can it be ascertained therefrom
how or in what manner this defendant attempted
to or did defraud the Government of the United
States or any Department thereof.

IV.

That it does not appear in said Indictment, in
the Second Count thereof, that this defendant pre-
sented any claim upon or against the Government
of the United States, or any Department or officer
thereof, or any corporation in which the United
States of America is a stock holder.

V.

That it does not appear in said Indictment, in
the Second Count thereof, that this defendant made
or caused to [17] be made or presented or caused
to be presented any claim for payment or approval
to or by any person or officer in the civil, military
or naval service of the United States, or any de-
partment thereof, or any corporation in which the
United States of America is a stock holder.

VI.

I That it does not appear in said Indictment, in
ithe Second Count thereof, that this defendant made,
jcaused to be made or presented or caused to be
Ipresented a claim to any person or officer of the
'Government of the United States having authority
to allow and approve such claim.

28 Ben A. Bost vs. !

Demumng to the Third Count of Said Indict-
ment, Defendant Specifies as Follows:

I.

The facts set forth in the Third Coimt do not
state facts sufficient to constitute an offense against
the United States. M

11. *■

That it does not appear in said Indictment, in
the Third Count thereof, nor can it he ascertained
therefrom, whether this defendant is charged with
a violation of the provisions of Section 80 of Title
18 of the United States Criminal Code, or a viola-
tion of the Gold Reserve Act of 1934.

III.

That it does not appear in said Third Count of
the Indictment, nor can it be ascertained therefrom
how or in what manner this defendant attempted
to or did defraud the Government of the United
States or any Department thereof.

IV.

That it does not appear in said Indictment, in
the Third Count thereof, that this defendant pre-
sented any claim upon or against the Government
of the United States, or any Department or Officer
thereof, or any corporation in which [18] the
United States of America is a stock holder.

V.

That it does not appear in said Indictment, in
the Third Count thereof, that this defendant made

TJmted States of America 29

or caused to be made or presented or caused to be

presented any claim for payment or approval to

j or by any person or officer in the civil, military or

[naval service of the United States, or any depart-

'ment thereof, or any corporation in which the

United States of America is a stock holder.

VI.

That it does not appear in said Indictment, in
the Third Count thereof, that this defendant made,
caused to be made or presented or caused to be
presented a claim to any person or officer of the
Government of the United States ha\dng authority
to allow and approve such claim.

Demurring to the Fourth Count of Said Indict-
ment, Defendant Specifies as Follows:

I.

The facts set forth in the Fourth Count do not
state facts sufficient to constitute an offense against
the United States.

11.

That it does not appear in said Indictment, in
the Fourth Count thereof, nor can it be ascertained
therefrom, whether this defendant is charged with
a violation of the provisions of Section 80 of Title
18 of the United States Criminal Code, or a viola-
tion of the Gold Reserve Act of 1934.

III.

That it does not appear in said Fourth Count of
the Indictment, nor can it be ascertained therefrom

30 Ben A. Bost vs.

how or in what manner this defendant attempted
to or did defi-aud the Government of the United
States or any Department thereof. [19]

IV.
That it does not appear in said Indictment, in
the Fourth C^ount thereof, that this defendant pre-
sented any claim upon or against the Government
of the United States, or any Department or Officer
thereof, or any corporation in which the United
States of America is a stock holder.

V.

That it does not appear in said Indictment, in
the Fourth Count thereof, that this defendant made
or caused to be made or presented or caused to be
presented any claim for payment or approval to or
by any person or officer in the civil, military or
naval service of the United States, or any depart-
ment thereof, or any corporation in which the
United States of America is a stock holder.

VI.

That it does not appear in said Indictment, in-
the Fourth Coimt thereof, that this defendant made,
caused to be made or presented or caused to be
presented a claim to any person or officer of the
Government of the United States ha\dng authority
to allow and approve such claim.

United States of America 31

Deinurring to the Fifth Coimt of Said Indict-
ment, Defendant Specities as Follows:

I.

The facts set forth in the Fifth Count do not
state facts sufficient to constitute an offense against
the United States.

11.

That it does not appear in said Indictment, in
the Fifth Count thereof, nor can it be ascertained
therefrom, whether this defendant is charged with
a violation of the provisions of Section 80 of Title
18 of the United States Criminal Code, or a viola-
tion of the Gold Reserve Act of 1931. [20]

III.

That is does not appear in said Fifth Count of
the Indictment, nor can it be ascertained therefrom
how or in what mamier this defendant attempted
to or did defraud the Government of the United
States or any Department thereof.

IV.

That it does not appear in said Indictment, in
^the Fifth Count thereof, that this defendant pre-
sented any claim upon or against the Government
of the United States, or any Department or Officer
thereof, or any corporation in which the United
iStates of America is a stock holder.

V.

I That it does not appear in said Indictment, in
[the Fifth Count thereof, that this defendant made

32 BenA.Bostvs.

or caused to be made or presented or caused to l)e
presented any claim for payment or approval to or
by any person or officer in the civil, military or
naval service of the United States, or any depart-
ment thereof, or any corporation in which the
United States of America is a stock holder.

VI.

That it does not appear in said Indictment, in
the Fifth Count thereof, that this defendant made,
caused to be made or presented or caused to be
presented a claim to any person or officer of the
Government of the United States having authority
to allow and approve such claim.

Wherefore, this defendant prays that said In-
dictment be as to him dismissed.

Dated: April 30, 1937.

RAY T. COUGHLIN

Attorney for Defendant.

[Endorsed] : Filed May 1, 1937. [21]

I

A

[Title of District Court.]

At a Stated Term of the Southern Division of
the United States District Court for the Northern
District of California, held at the Court Room
thereof, in the City and County of San Francisco,
on Tuesday, the 18th day of May, in the year of
our Lord one thousand nine hundred and thirty-
seven.

United States of America 33

Present: The Honorable A. F. St. Sure, District
Judge.

[Title of Cause.]

In this case the defendant Ben A. Bost was pres-
ent with Attorney, R. Coughlin, Esq. Robt. L. Mc-
Williams, Esq., Assistant U. S. Attorney, was
present for and on behalf of United States. Ordered
that the Demurrer to Indictment heretofore sub-
mitted herein be and the same is hereby overruled,
and that the Motion for a Bill of Particulars, like-
wise heretofore submitted, be and the same is hereby
denied, and that exceptions be entered as to said
orders.

Defendant thereupon being called to plead, en-
tered a plea of ''Not Guilty", which said plea the
Court ordered entered. After hearing Attorneys,
ordered trial set for June 29, 1937. [22]

[Title of District Court.]

At a Stated Term of the Southern Division of
the United States District Court for the Northern
District of C^alifoniia, held at the Court Room
thereof, in the City and County of San Francisco,
on Tuesday, the 23rd day of November, in the
year of our Lord one thousand nine hundred and
thirty-seven.

Present: The Honorable A. F. St. Sure, District
Judge.

34 Ben A. Bost vs.

[Title of Cause.]

This cause came on regularly this day for trial
of the defendant, Ben A. Bost, who was present
with his Attorneys Ray T. Coughlin, Esq., and
Robert Zarick, Esq., Robert L. McWilliams, Esq.,
and Sydney P. Murman, Esq., Assistant United '
States Attorneys, were present for and on behalf
of the United States.

Thereupon the following persons, viz.:

1. Arthur W. Hooper

2. Roy R. Rogers

3. Geo. de St. Germain

4. Louis H. Heard

5. Allen V. Williams

6. Clarke E. Wayland

7. Edmund H. Mott

8. Charles H. Adams

9. Matthew G. Best

10. J. Henry Rosenbaum

11. Marcus A. Grenadier

12. AValter H. Baird

twelve good and lawful jurors, were, after bem^
duly examined under oath, accepted and sworn t(
try the issues [23] joined herein. Mr. McWilliams
made a statement to the Court and Jury on behalf
of the United States. Mr. Coughlin made a state-
ment to the Court and Jury on behalf of the de-
fendant. Chas. W. Gray, H. L. Hastings, Andrew J.
Loftus, H. C. Sedelmeyer, Harry D. McGlashan,
Walter L. Mobley, R. C. L>Tin, Laurence Bones,

United States of America 35

Clarence Collins, Elmer C. Ogle, Robert Murdock,
William Campbell, Edward N. Rains, E. L. Scott,
Henry Lahiff, John A. Shields, J. C. Ackley, Sartor
Francis, Charles B. Rich were sworn and testified
on behalf of the United States. The United States
introduced in evidence and filed 5 exhibits Nos. 1,
2, 3, 4, 5.

Thereupon the Court, after admonishing the Jury,
ordered that the further trial of this case be and
I the same is hereby continued to Wednesday, No-
vember 24, 1937, at 10 a.m. [24]

[Title of District Court.]

At a Stated Term of the Southern Division of
the United States District Court for the Northern
District of California, held at the C^ourt Room
thereof, in the City and County of San Francisco,
on Wednesday, the 24th day of November, in the
year of our Lord one thousand nine hundred and
thirty-seven.

Present: The Honorable A. F. St. Sure, District
Judge.

[Title of Cause.]

The parties hereto and the Jury heretofore im-
paneled herein being present, the trial hereof was
thereupon resumed. Charles B. Rich and H. L.
Hastings were recalled and further testified on
behalf of the United States. Clyde M. Larigure,

36 Ben A. Bost vs.

John Bonard were sworn and testified on behalf
of the United States. The case was then rested on
behalf of the United States.

Mr. Coughlin moved the Court to instruct the
Jury to return a Verdict of Not Guilty, which
motion the Court ordered denied.

A. M. Holmes, Ben A. Bost, C. W. Chapman,
( ■. S, Arbogast, J. Zannoco were sworn and testified
on behalf of defendant.

Mr. Mc Williams introduced in evidence and filed
U. S. [25] exhibit No. 6.

Thereupon the defendant rested.

H. L. Hastings and R. C. Lynn were recalled
and testified on behalf of the United States in re-
buttal; and the evidence was closed. Mr. Coughlin
renewed the motion to instruct the Jury to return
a Verdict of Not Guilty in favor of the defendant.
Ordered that the further trial hereof be continued
until Friday, November 26, 1937, at 10 o'clock a.m.,
and the Jury after being duly admonished by the
Court, was excused until that time. [26]

[Title of District Court.]

At a Stated Term of the Southern Division of
the United States District Court for the Northern
District of California, held at the Court Room
thereof, in the City and County of San Francisco,
on Friday, the 26th day of November, in the year
of our Lord one thousand nine hundred and thirty-
seven.

United States of America 37

Present : The Honorable A. F. St. Sure, District
Judge.

[Title of Cause.]

The defendant, the Attorneys, and the Jury here-
tofore impaneled herein being present as heretofore,
the further trial hereof was thereupon resumed.
Ordered that the motion for directed verdict of
not ftiiilty be and the same is hereby denied. After
argument by the Attorneys and the instructions of
the Court to the Jury, the Jury at 1 :54 p.m., retired
to deliberate upon their verdict. At 2:54 p.m., the
Jury returned into (^ouii: and upon being asked if
they had agreed upon a verdict replied in the af-
firmative and returned the following verdict, which
was ordered recorded, viz.: ''We, the Jury, find as
to the defendant at the Bar, as follows: Guilty,
1st Coimt; Guilty, 2nd Count; Guilty, 3rd Coimt;
Guilty, 4th Count ; Guilty, 5th Count. C. H. Adams,
Foreman." The Jury, upon being asked if said
verdict as recorded is their verdict, each juror
replied that it is. Ordered that the Jury be dis-
charged from the further consideration hereof [27]
and that the jurors are hereby excused until noti-
fied to report.

It is ordered that the defendant be remanded
into the custody of Ray T. Coughlin, Esq., his
Attorney, and that defendant appear on Decem-
ber 3, 1937, at 10 a.m., for judgment.

Further ordered that this case be and the same
is hereby referred to the Probation Officer for in-
vestigation and report. [28]

38 Ben A. Bost vs.

[Title of District Court and Cause.]

VERDICT.

We, the Jury, find as to the defendant at tlie
bar, as follows:

Guilty, 1st Count.
Guilty, 2nd Count.
Guilty, 3rd Count.
Guilty, 4th Coimt.
Guilty, 5th Count.

C. H. ADAMS

Foreman.

[Endorsed]: Filed at 2:54 P.M. Nov. 26, 1937.

[29]

[Title of District Court and Cause.]

MOTION FOR A NEW TRIAL.

Comes now the defendant, Ben A. Bost, and
moves the above entitled Court for a new trial in
the above entitled cause and for gromids specifies:

1. That on the trial the Judge admitted •
improper evidence.

2. That the verdict is contrary to the evi-
dence.

3. That the verdict is contrary to law.

4. That the verdict should have been for the
defendant.

5. That the Court erred upon the trial of
said cause in deciding questions of law arising

United States of America 39

diii'ing the course of trial, which errors were

duly excepted to.

RAY T. COUGHLIN
ROBERT A. ZARICK

Attorneys for Defendant.

(Admission of Service)

[Endorsed] : Filed Nov. 30, 1937. [30]

[Title of District Court.]

At a Stated Term of the Southern Division of
the United States District Court for the Northern
District of California, held at the Court Room
thereof, in the City and County of San Francisco,
on Friday, the 3rd day of December, in the year
of our Lord one thousand nine hundred and thirty-
seven.

Present: The Honorable A. F. St. Sure, District
Judge.

[Title of Cause.]

This cause came on regularly this day for hearing
of the Defendant's Motion for New Trial and for
the pronouncing of judgment upon the defendant
Ben A. Bost. The defendant was present in Court
with his Attorney, Ray T. Coughlin, Esq. Robert B,
Mc Williams, Esq., Assistant United States Attor-
ney, was present for and on behalf of the United
States. After hearing Mr. Coughlin, it is ordered
that the Defendant's Motion for New Trial be and

40 Ben A. Bost vs.

the same is hereby denied, to which order the de-
fendant was allowed an Exception.

Upon consideration of the Report of the Proba-
tion Officer, it is ordered that the defendant's ap-
plication for probation be and the same is hereby
denied.

The defendant was then called for judgment, duly
informed by the Court of the nature of the Indict-
ment filed against him on the 30th day of March,
1937, charging him with a [31] violation of Title
18 U.S.C.A., Section 80; of his arraignment and
plea of Not Guilty ; of his trial, and the verdict of
the Jury on the 26th day of November, 1937. The
defendant was then asked if he had any legal cause
to show why judgment should not now be entered
herein and no sufficient cause being shown or ap-
pearing to the Court, and the Court ha\ing denied
a Motion for New Trial and a Motion in Arrest
of Judgment; and

Whereas the said defendant having been duly
convicted in this cause, as aforesaid.

It Is Therefore Ordered and Adjudged that the
said Ben A. Bost be imprisoned in a United States
Penitentiary to be designated by the Attorney Gen-
eral (^f the United States for and during the temi
aiul ])eri()d of Five (5) Years and pay a fine in the
sum of Five Thousand and No/100 ($5000.00) Dol-
lars as to th(^ First Count of the Indictment; be
imprisoned for and during the term and period of
Five (5) Years on the Second Count of the Indict-
ment; be imprisoned for and during the term and

United States of America 41

j period of Five (5) Years on the Third Count of
j the Indictment; be imprisoned for and during the
I term of Five (5) Years on the Fourth Count of the
Indictment; and be imprisoned for and during the
term and period of Five (5) Years on the Fifth
Count of the Indictment. Further ordered that in
the default of the payment of said tine said defend-
ant be further imprisoned in the United States
Penitentiary until said fine be paid or until he be
otherwise discharged in due course of law. Further
ordered that said terms of imprisonment imposed
on said defendant in this cause run concurrently.
Further Ordered that said defendant be com-
mitted, for said term of imprisonment, to the cus-
tody of the Attorney General of the United States
or his authorized representative, and that the
United States Marshal for this District forth- [32]
with deliver said defendant to the Warden of said
United States Penitentiary for and in execution
of this Judgment.

Further ordered that a certified copy of this
Judgment serve as the Commitment herein. [33]

42 Ben A. Bost vs.

In the Southern Division of the United States Dis-
trict Court for the Northern District of Cali-
fornia.

No. 25961-S.

Violation: Title 18 USCA, Section 80 (False
Affidavit — Gold Reserve Act).

UNITED STATES OF AMERICA

vs.
BEN A. BOST

JUDGMENT.

This cause came on regularly for trial on the 23rd
day of November, 1937, Robt. L. McWilliams, Esq.,
Assistant United States Attorney, appearing on
behalf of the United States, and the defendant being
present in Court with Ray T. Coughlin, Esq., his
Attorney.

Thereupon a Jury of twelve persons was duly
impaneled, accepted and sworn to try the issues
joined herein.

Whereupon, after hearing both oral and docu-
mentary evidence upon behalf of the respective
parties, the cause was submitted to the Jury, who
retired to deliberate upon their verdict, and sub-
sequently returned into Coui't, and being called all
answered to their names, and upon being asked if
they liad agreed upon a verdict, rendered the fol-
lowing written verdict, which was by the Court or-
dered recorded on the minutes of the Court and
which said verdict is as follows :

I

United States of America 43

''We, the Jury, find as to the defendant at the
bar, as follows:
Guilty, 1st Count.
Guilty, 2nd Count.
Guilty, 3rd Count.
Guilty, 4th Coimt.
Guilty, 5th Count.

C. H. ADAMS,

Foreman.''

Whereas, on the 3rd day of December, 1937, the
defendant and the attorneys being present in Court,
the defendant was called for Judgment. The de-
fendant was duly informed by the Court of the
' nature of the Indictment filed against him on the
[ 30th day of March, 1937, charging him with a
violation of Title 18 USCA, Section 80; of his ar-
raignment and plea of Not Guilty; of his trial and
the verdict of the Jury on the 26th day of No-
vember, 1937.

The defendant w^as then asked if he had any legal
cause to show w^hy judgment should not now be
entered herein and no sufficient cause being shown
or appearing to the Court, and the Court having
Denied a Motion for New Trial and a Motion in
Arrest of Judgment; and

Whereas, the said defendant having been duly
convicted in this Court, as aforesaid, [34]

It Is Therefore Ordered and Adjudged that the
said, Ben A. Bost, be imprisoned in a United States
Penitentiary to be designated by the Attorney Gen-

44 Ben A. Bost vs.

eral of the United States for and during the term
and period of Five (5) Years and pay a fine in the
sum of Five Thousand and No/100 ($5000.00) Dol-
lars as to the First Count of the Indictment; be
imprisoned for and during the terai and period of
Five (5) Years on the Second Comit of the Indict-
ment; be imprisoned for and during the term and
period of Five (5) Years on the Third Count of
the Indictment; be imprisoned for and during the
term and period of Five (5) Years on the Fourth
Count of the Indictment; and be imprisoned for
and during the temi and period of Five (5) Years
on the Fifth Count of the Indictment. Further
ordered that in default of the payment of said fuie
said defendant be further imprisoned in the United
States Penitentiary until said fine be paid or mitil
he be otherv^dse discharged in due course of law.
Fui*ther ordered that said terms of imprisonment
imposed on said defendant in this cause run con-
currently.

Further Ordered that said defendant be com-
mitted, for said tenii of imprisonment, to the cus-
tody of the Attorney General of the United States
or his authorized representative, and that the I
United States Marshal for this District, forthwith!
deliver said defendant to the Warden of said United]
States Penitentiaiy for and in execution of this^
Judgment.

Further Ordered that a certified copy of this^
Judgment serve as the Commitment herein.

United States of America 45

Dated: San Francisco, California. December 3,
1937.

A. F. ST. SURE

United States District Judge.
Examined by:
R. McW.

Assistant United States Attorney.

Judgment filed and entered this 3rd day of De-
cember, 1937.

WALTER B. MALING

Clerk,
By C. W. CALBREATH

Deputy Clerk.

Entered in Vol. 30 Judg. and Decrees at Page
455-456. [35]

No. 25961-S.
UNITED STATES OF AMERICA

vs.
BEN A. BOST.

Specific Violations. — Violation of 18 U.S.C.A.
Sec. 80 (False Affidavit Gold Reserve Act).

First Count of the Indictment — Said defendant
requested the Mint of the United States located at
San Francisco, California, to purchase certain gold,
which was accompanied by an affidavit, wherein said
defendant wilfully, knowingly and unlawfully and
contrary to his oath swore to certain material mat-

4:6 Ben A. Bost vs.

tei's which were not true and which he did not be-
lieve to be true when he swore to said affidavit, to-
wit, that he was the owner of a mining claim that
the gold was removed from said claim.

Second, Third, Fourth and Fifth Counts — Same
offense described in the First Comit as to various
dates and amounts of gold. [36]

At a Stated Term, to-wit: The October Tem
A. D. 193— of the United States Circuit Court of
Appeals for the Ninth Circuit, held in the Court
Room thereof, in the City and County of San Fran-
cisco, in the State of California, on Monday the
fourteenth day of February in the year of our Lord
one thousand nine hundred and thirty-eight.
Present :

Honorable Curtis 1). Wilbur^ Senior Circuit

Judge, Presiding,
Honorable Francis A. Garrecht, Circuit Judge,
Honorable Clifton Mathews, Circuit Judge.

25961-S.

No. 8678.

BEN BOST,

Appellant,

vs.
UNITED STATES OF AMERICA,

Appellee.

United States of America 47

ORDER EXTENDING TIME FOR LODGE-
MENT OF BILL OF EXCEPTIONS AND
SETTLEMENT THEREOF, AND ASSIGN-
MENT OF ERRORS.

The motion of Ben Bost, the appellant in the
jabove entitled action, came on regularly for hearing
|on the 14th day of February, 1938, upon all the
files, papers, proceedings and records in the above
I entitled action, James M. Hanley appearing as
[attorney for appellant, and Robert L. Mc Williams,
lAssistant United States Attorney appearing for the
; appellee, and good cause appearing therefor,
I It Is Ordered that the appellant be and he is
'hereby given an extension of time in which to lodge
I bill of exceptions and file his assignment of errors
lin the above entitled action, to and including the
21st day of February, 1938.

I And It Is Further Ordered that the appellee is
granted to and including the 3rd day of March,
1938, in which to file amendments to the bill of
exceptions; and

It Is Further Ordered that the trial court may
then settle said bill of exceptions within five days
ithereafter.

■ (Certification of Clerk, U. S. Circuit Court of
Appeals).

! Filed Feb. 14, 1938. [37]

48 Beti A. Bost vs.

[Title of District Court and Cause.]

BILL OF EXCEPTIONS OF DEFENDANT
BEN A. BOST.

Be It Remembered: That on or about the 30th
da}^ of March, 1937, the grand jury of the United
States in and for the Northern District of CaU-
fornia. Southern Division, returned in this Court
its indictment against the defendant in the above-
entitled cause, charging him in five counts of violat-
ing Section 80, Title 18, U.S.C.A.; that thereafter
said defendant appeared in said court and was duly
arraigned.

And Be It Further Remembered : That thereafter,
and on the 1st day of May, 1937, and before said
defendant Ben A. Bost had pleaded to said indict-
ment, there was filed on behalf of said defendant
a demurrer to said indictment, which said demurrer
was, by the Court, subsequently overruled. Said
ruling was duly excepted to.

(Exception No. 1.)

And Be It Further Remembered: That thereafter,
the defendant having pleaded not guilty, and the
cause being at issue, the same came on for trial on
Tuesday, November 23, 1937, before the Honorable
A. F. St. Sure, District Judge of said Court, the
United States being represented in court by Robert
L. McWilliams, Esq. and Sydney P. Murman, Esq.,
Assistant United States Attorneys, and the defend-
ant being personally present and [38] represented
by Ray T. Coughlin, Esq., the following proceedings
were had:

United States of America 49

Mr. Mc Williams made a statement to the Court
and Jury on behalf of the United States, and Ray
T. Coughlin made a statement to the Court and
Jury on behalf of the defendant.

Thereupon the Government, through Robert L.
Mc Williams, Assistant United States Attorney,
called

CHARLES W. GRAY,

who testified under oath as follows:

I am in the employ of the United States Mint
as license clerk. I have been so employed approxi-
mately four years. My duties with respect to affi-
davits that may be sent to the Mint along with gold
which is offered to the Mint for purchase or, the
affidavit comes through the mail and is brought to
me; I review^ it and see whether it is filled out cor-
rectly and it is then O.K.'d by me and sent to the
receiving room. I have seen these five purported
affidavits. Two were taken from the Mint records
and were brought here by me, and the other three
are initialed by me as received and sent to the
receiving room at the time the deposits are accepted.
The dates indicate that they were received on or
about the dates they bear, and there is a red pencil
mark here showing the date the deposits were re-
ceived in the receiving room. These affidavits, after
they arrive, are checked as to whether or not they
are filled out correctly, and then taken into the re-
ceiving room and turned over to the receiving clerk.
Mr. Hastings is the receiving clerk.

50 Be7i A. Bost vs.

The next witness called for the Government was
H. L. HASTINGS,

who testified under oath as follows:

I am employed in the United States Mint. I am
head of the [39] receiving room. I have been em-
ployed there about 40 years.

Q. Referring to these affidavits, do you have
anything to do wdth either of these or similar affi-
davits, or with the gold that is submitted with them t

A. They have to be re-sealed with the deposits
they refer to.

Q. Will you explain what you mean by saying
''re-sealed'"?

A. They open the packages and then note the
name on the package and compare it with the name
and date on the affidavit showing that the two go
together. That was done in this case with these
affidavits.

The next witness called for the Government was

ANDREW J. LOFTUS,

who testified under oath as follows:

I am a computer in the United States Mint. I
have held that position about four or five years.
A computer is one who computes all of the deposits
that are made in the Mint. For example, when gold
is submitted or deposited at the Mint for sale, the
first thing that happens to that gold after it is
turned in is it goes into the receiving room and
then afterwards comes back to me to be computed.

United States of America 51

(Testimony of Andrew J. Loftus.)
I have nothing to do with the affidavits. With ref-
erence to the gold, itself, I compute its weight and
value.

The next witness called for the Government was
H. C. SEDELMEYER,

who testified under oath as follows:

I am a civil engineer. I am in the United States
Forest Service. I have been connected with the
United States Forest Service twenty-five years, in
San Francisco. I receive from time to time maps
from the Department at Washington. I have a map
[40] from my own private reports in San Fran-
cisco. It is a map of the Eldorado National Park.
It is an official map.

Mr. Mc Williams: I desire to offer the map in
evidence and ask to have it marked as Govern-
ment's Exhibit.

Mr. Coughlin: Might I inquire the purpose?

Mr. Mc Williams: Yes, it is for the purpose of
showing that neither on this map nor any other
official map is there any Cougar Canon, although
there are many canons and many other places and
towns and topographical points indicated on the
map, but no Cougar Canon.

Mr. Coughlin: That is objected to on the ground
that no proper foundation has been laid for the
map.

The Court: You will have to proceed further
and lay a foundation.

52 Ben A. Bost vs.

(Testimony of H. C. Sedolmeyer.)

Mt. Mc Williams: Q. Will you state what you
mean when you say that this is an otificial map in
your department?

A. This is a map that we use for all of our
demonstration work in the National Forest, and
was prepared in San Francisco from U. S. Surveys,
General Land Office Surveys, and our own sui-veys,
it was compiled from all different sources into one
map.

The Court: Who compiled it?

A. It was done under my supervision by one of
the draftsmen.

Q. It is correct?

A. It is as far as the information we had.

Q. Where did you get your information?

A. From the United States Geological Survey,
the General Land Office Survey, and our own sur-
veys, timber surveys.

The Court: Is that all?

Mr. Mc Williams: Yes.

Mr. Coughlin: May I further urge the objection
that it is hearsay?

The Court: Overruled. [41]

Mr. Mc Williams: May it be marked as United
States Exhibit 1 ?

The Court: Yes.

Mr. Coughlin: We note an exception.

(Exception No. 2.)
(The map was marked "U. S. Exhibit 2.")

United States of America 53

(Testimony of H. C. Sedelmeyer.)

Cross-Examination.

By Mr. Coughlin:

I did not draw this map, myself. I compared this
map with the country surrounding Georgetown
and Eldorado County. I did not go up there myself
and do it. I went and checked with each ranger as
to the correctness of the map, itself. I did not do
it, myself. I am reasonably sure that every canon
that is referred to or mentioned by the natives or
miners in or around Georgetown is designated on
that map, but I am not positive. The mining claims
in Eldorado County do not appear on that map.
AVe never make a practice of consulting various old
miners in the vicinity of Georgetown and Eldorado
Coimty because we can't rely on that information.
The area of Eldorado County is 1737 miles. I do
not know how many mining claims there are re-
corded in Eldorado Coimty; I have not any idea
how many there were in 1931 ; I have not anything
to do with mining claims. This map was drawn
originally in 1923 or 1924 and revised to 1934-5.

The next witness for the Government was

HARRY D. McGLASHAM,

i ■ '

iwho testified under oath as follows:

i Direct Examination.

By Mr McWilliams:

i I am assistant engineer of the United States,
I geological engineer. I have been with the United

54 Ben A. Bost vs.

(Testimony of Harry D. McGlasham.)
States Oeological Survey [42] 31 years. The Geo-
logical Survey has many different duties; the work
is divided into various branches; there is the geo-
logical branch, there is the topographical branch,
which makes maps. When the Geological Survey
was organized the geologists found they could not
go ahead without maps, so the map division was
organized, and as a result they prepared a map
primarily for the use of geologists, and incidentally
for public use. I think that there are maps in
existence prejDared by our department covering
Eldorado County; I think the whole county is cov-
ered. I have several maps that cover Eldorado
County. I have official maps of my department
covering Georgetown in Eldorado County and cov-
ering Rattlesnake Bridge. I haA^e received those
maps from our Washington office. They are official
maps used in my department; I took them from
my files. I had nothing to do with making them up,
myself. I know they are official maps put out by
the department.

Mr. Mc Williams: I desire to offer these in evi-
dence as one exhibit.

Mr. Coughlin: To which we object, if your Honor
please, on the groimd that the proper foundation
has not been laid, that they are hearsay.

The Court: Overruled.

Mr. Coughlin: Exception.

(Exception No. 3.)

(The maps were marked "U. S. Exhibit 3.")

United States of America .55

(Testimony of Harry D. McGlasham.)

Cross-Examination.
By Mr. Couglilin:

I did not draw these maps. They were not drawn
under my supervision. [43]

Redirect Examination.
By Mr. Mc Williams :

The brown lines are the contour lines which con-
nect points of equal elevation and the black lines
relate to land divisions, county lines, etc.

The next witness for the Government was
WALTER L. MOBLEY,

who under oath testified as follows:

Direct Examination.

By Mr. Murman:

I am a justice of the peace of Nevada Township,
Nevada Comit}^, California. I am also a notary
public for that same comity. I have been a notary
eight years. On Government's Exhibit 1 for identi-
fication, consisting of what purport to be five affi-
davits, which affidavits bear on the reverse side
thereof what purports to be the signature of Walter
L. Moblej^, those signatures are in fact my signature.
They were placed on those affidavits by me on the
dates set forth therein as the dates upon which the
affidavits were subscribed and sworn to before me.
On each of these affidavits there appears to be the

56 Ben A.Bost vs.

(Testimony of Walter L. Mobley.)
signature of Ben A. Bost, and that was placed on
those affidavits in my presence by Ben A. Bost.
I see Ben A. Bost in the court-room. The record
shows that the witness identified the defendant
Bost. At the time that the defendant in this case
placed his signature on those affidavits, prior to
his placing his signature on those affidavits I swore
him to tell the truth. I did that on each occasion,
as far as I remember. I have no doubt in my mind
about it because I never stated otherwise. That is
my usual practice. I can state Mr. Bost placed his
signature on those affidavits on the dates set forth
therein as the dates on which [44] they were sub-
scribed and sworn to by him.

Mr. Murman: If your Honor please, at this
time I ask that the affidavits heretofore marked
as Government's Exhibit 1 for identification be
placed in evidence as Government's Exhibit 1.

The Court: Admitted.

(The five affidavits were marked "U. S. Ex-
hibit 1.")

The next witness for the Government was
R. C. LYNN,

who testified under oath as follows:

Direct Examination.
By Mr. Mc Williams:

I am a special agent. Bureau of Internal Rev-
enue. I have been employed in that department of

United States of America 57

(Testimony of R. C. Lynn.)

the Government three years. I know the defendant
Ben A. Bost. I first met him on August 8, 1936, at
his home near Nevada City, California. The occa-
sion I had to meet him at that time and place was
I had been instructed by my superior officer to
make an investigation of several individuals who
it was thought possibly were handling and dealing
in stolen high grade gold ore, and I searched the
records of the United States Mint for the names
of licensed gold buyers, or former licensed gold
buyers who were selling gold in Nevada County, and
Mr. Bost's name was one of those that I found. I
thereupon called upon him at the time and place
mentioned, and had a conversation with him. The
first conversation was on the morning of August 8,
1936. There was no one else present besides Mr.
Bost and myself. I have a memorandum which was
not prepared at that time. It correctly sets out the
notes I made of the interview. They were made
when I discussed the case with Mr. Mc Williams.
I also have the original memorandum made at [45]
the time that I have used to refresh my memory.
Mr. Mc Williams: I doubt the propriety of your
using these under the circumstances, but will you
from your recollection and from your former ex-
amination of your original notes state what occurred
in the conversation that took place?
; A. He said that the gold sold by him to the
i Mint during 1935 was produced from the Lucky
, Gravel mining claim, and that he owned the mineral

58 Ben A. Bost vs.

(Testimony of R. C. Lynn.)

rights in this claim, and that he had leased it to
seven men who were actually producing the gold.
I asked him where the mine was located, and he
said it was approximately 40 miles north of George-
town, and possibly in Eldorado County.

Q. What did he state, if anything, as to whether
he knew these men?

Mr. Coughlin: To which we object on the ground
that—

Mr. Mc Williams: I will withdraw the question.
Proceed with the conversation.

Mr. Coughlin: I am going to object to this line
of testimony on the gTOund that the corpus delicti
has not been proven.

The Court: Overruled.

Mr. Coughlin: May I have an exception?

The Court: Yes.

(Exception No. 4.)

That was substantially all the discussion we had
on that occasion regarding the Lucky Gravel mining
claim. That was substantially all the discussion we
had on that day. The next conversation I had with
him was on the morning of August 24, 1936 at his
home. No one else was present.

Q. State the conversation that occurred on that
occasion ?

Mr. Coughlin: The same objection.

The Court: Overruled.

Mr. Coughlin: Note an exception.
(Exception No. 5.) [46]

United States of America 59

(Testimony of R. C. Ljani.)

I told Mr. Bost that I had made a number of
inquiries in an effort to determine where the Lucky
Gravel mining claim might be located, and that I
had been unsuccessful in finding the mine, and told
him that I would furnish transportation if he would
go mth me to show me the mine. He said that he
could not do that for the reason that he had never
seen the mine but once, on one occasion, and that
one of the men leasing it had met him with jacks
below Auburn, at Rattlesnake Bridge, and they
had ridden approximately 40 miles in a northeast-
erly direction, and as it had been five or six years
before that he did not recall the route that he took,
exactly, and would not be able to show me the mine.
I have been to Rattlesnake Bridge. It is on the
highway below Auburn going to Placerville. It is
just a little ways east of that highway and a number
of miles south of Auburn. I would not be able to
tell 3^ou definitely how many miles south of Auburn.
Refreshing my recollection from Government's Ex-
hibit 2, it is about 6 or 7 miles south. I know where
Georgetown is. It is approximately due east of
Auburn and on the map it is fourteen miles. He
stated on that occasion he could not take me there
as he did not know the way. I had another conver-
sation with him at his office in Nevada City on
September 18, 1936. Deputy Collector of Internal
Revenue William Malloy was present. I told Mr.
Bost that I had not been successful in locating the
mine, or any record of it, nor had I found anyone

60 Ben A. Bost vs.

(Testimony of R. C. Lynn.)

who had ever heard of it besides himself, and told
him that I wanted to question him further regarding
it, and he said he would answer any questions I
asked liim, so I placed him under oath. I am author-
ized to do that in my capacity as a representative
of the Internal Revenue Department. I placed hira
under oath and after warning him of his constitu-
tional rights, that he would not be required to an-
swer any questions which would incriminate him, I
asked him questions about the circumstances under
which he acquired this mine [47] and leased it. In
answer to my questions he said that he had known
G. A. Swissler years ago in Trinity County. He did
not spell Swissler 's name, but he produced a copy
of a purported lease on which Swissler 's name was.

Mr. Coughlin: In order that I do not interrupt
may it be understood that my objection goes to this
entire line of testimony?

The Court: Yes.

Mr. Coughlin : On the ground that corpus delicti
has not been proven.

The Court : Yes. Of course, if it is not connected
up you can move to strike it out.

Mr. McWilliams: Yes, that is stipulated to.
(Exception No. 6.)

He said that about five or six years ago, prior
to that date in 1936, Mr. Swissler had come to him
and told him he had located a claim which might
be worth working for ore production, and Swissler
said that he needed money to start working it,

United States of America 61

(Testimony of R. C. Lynn.)

whereupon Mr. Bost furnished him several hundred
dollars. Later Mr. Bost told me in that same con-
versation that he had probably invested as much
as $500 in the mine; that after advancing Swissler
this money he next heard about the claim when one
Hans Hensen — Mr. Hensen's name appears in
that lease.

Mr. Mc Williams: Might I interrupt you and
show you what purports to be such a lease and ask

I you if that is the document that he gave you at
that time.

I A. Yes.

! Mr. Mc Williams: I desire to read it in evidence,
if your Honor please, at this time, as well as offer it.
(The lease was marked "U. S. Exhibit 4.")

Proceeding with Mr. Bost's statement, he said

i that subsequent to the time he advanced that money

, to Swissler Mr. Hensen came to [48] him and re-

I quested that he go to see the claim; that he then

met Hensen at Rattlesnake Bridge, below Auburn,

' and he said it was in the fall, frost was on the

ground, and Hensen had some jacks with him there

' at the bridge, and they started after dark, in the

I evening, and rode at least seven hours, he said pos-

i sibly longer, in a northeasterly direction, and ar-

; rived at the claim before daylight, where they

met Mr. Swissler; that he stayed at the claim one

day, made the return trip to Rattlesnake Bridge

after dark the next evening; that he next saw

Swissler and Hensen on or about January 2, 1932,

62 Ben A.Bostvs.

(Tc^stimony of R. C. Lynn.)

when they came to his home in Nevada City and
had with them a thii'd individual whose name ap-
pears on the lease as Larry Larsen. He said those
three men brought him retorted gold which weighed,
as I recall, 41.76 ounces. I have seen retorted gold
and know what it is. It is gold that is mined or
panned, covered with mercury, and in a sponge,
in a jiorous form; that is retorted gold. Mercury,
so to speak, absorbs the gold. Sponge is a sort of j
porous type of gold. He said that when the three
brought the gold to him it was the first time he
knew that they had obtained any production; that
he then melted the gold and examined it, himself,
and the three men said they considered him the real
owner of the mineral rights on the claim, and said
they would like to lease it from him, and that either
that first day that they came to him, or the day
following, January 2. 1932, the lease was dra\Mi,
which he exhibited to me; that he thereupon sent
that gold to the United States Mint, and, according
to the terms of the lease — at that time the men were
at the office — he advanced them 90 per cent, of what
he estimated was the value of the gold, as under
the terms of the agreement with them he was to
retain ten per cent, of the production for himself, n
I did not go into the price that was used as the
basis of compensation per ounce. That was the old
[49] i)rice, between $21 and $35. That after the timn
tlic lease was drawn he had never seen Larsen
again; that hv saw Swissler again on one occasion,

'4

United States of America 63

(Testimony of R. C. Lynn.)

which was approximately three years prior to Sep-
tember, 1936, w^hen Mr. Swissler came to his home;
that all of his subsequent shipments of gold to the
United States Mint after that lease was drawn rep-
resented gold which Larsen had brought to him and
said it w^as produced at the Lucky Gravel Mining
Claim; that each time when Larsen would bring a
lot of gold to him Bost would borrow sufficient
money from some relative to advance Larsen the
estimated 90 per cent, of the value. It was Larsen
that brought it. I made a memorandmn of the first
conversation at the time, I made a memorandum
of the second conversation in my diary immediately
after I left his home, and made a memorandum of
his answers to my question wdien he w as under oath
at the time he answered them. As I recall, that was
approximately all the information that I secured
from him regarding the Lucky Gravel mining claim ;
he reiterated his previous statement made, that he
could not take me to the mine as he did not recall
just exactly where it was; he said he remembered
that it was north of Georgetown approximately 40
miles in a northeasterly direction from Rattlesnake
I Bridge. He said that Hansen had been bringing
these lots of gold in to him during 1932, 1933, 1934
i and 1935. He said that he had not seen Hensen since
; the time Hensen brought the gold to him in the fall
I of 1935, which was the last shipment that Bost had
; made to the Mint, and that he had not seen Hensen
for approximately a year; that he did not know

64 Ben A. Bost vs.

(Testimony of R. C. L^tlh.)

why they suddenly quit bringing gold to him, and
that he had never questioned their honesty in bring-
ing tlie gold produced to him so that he would have
his 10 per cent. I asked Mr. Bost if he could tell
nie where I might locate them, and he said he had
never written to them, nor had they ever written
to him, and that he had no idea where I [50] could
locate them. I do not recall that he said anything in
regard to the record being kept by the parties to
this lease of the amount of production and other
data. He did not show me any record that I recall.
I asked Mr. Bost why the mineral rights to the
property had never been claimed through a recoid-
ing with the Comity Recorder of either Eldorado
or Placer County, wherever the mine was located,
and he said he had no idea why no claim had ever
been filed in the official records. He also said he
had never discussed with any of the three men the
propriety of filing, and he also said that he imder-
stood there were seven men, including the three
signators, working the claim, but that he did not
know the names of the other four, nor had he ever
seen them. He said his total investment in the mine
was probably as much as $500. I questioned him as
to any anxiety on his part of the men bringing
in all the gold produced, and he said he never
questioned their honesty about bringing in all
the gold the mine produced. He said the last
time he had seen Hensen was approximately a year
prior to the date I was questioning him; he stated
it as being just prior to the date he made his last

United States of America 65

(Testimony of R. C. Lynn.)

shipment to the Mint. As I recall, he said he always
paid Hensen 90 per cent, of the estimated value of
the gold. I do not believe I questioned him about
what Hensen did ^vith the money. I have stated all
the interviewers that I now recall. I just questioned
Mr. Bost on three occasions. I subsequently during
that period made an investigation to try to locate
whether there was such a mine in such a canon.

Q. When and w^liere and with whom did you
make such an investigation t

A. Well, on August 18, 1936, I went to the office
of Mr. DeAVitt Nelson, superintendent of the Tahoe
National Forest in Nevada City and searched the
maps and records in his office, and questioned Mr.
Nelson, and questioned certain of his rangers re-
garding Cougar Canon, or Lucky Gravel mining
[51] claim, and fomid no information.

Mr. Coughlin: We object to this and ask that
the answer be stricken on the ground it is hearsay.

Mr. Mc Williams: I submit it is not hearsay. It
is direct information to the point that there was
no such place given.

The Court: Denied.

Mr. Coughlin: May I have an exception, your
Honor ?

(Exception No. 7.)

On August 27 I went to the office of the superin-
tendent of the Eldorado National Forest in Placer-
ville, California, and there questioned Acting Forest
Supervisor Harris, and searched the maps and rec-

66 Ben A. Bost vs.

(Testimony of R. C. Lynn.)

ords in his office without obtaining any information
regarding Cougar Canon or Lucky Gravel mining
claim, and on that same day I went to the office
of the County Assessor of Eldorado County, IVIr.
C. L. Scott, and he told me he had formerly been
a forest ranger at the Georgetown Ranger Station,
and in his work covered all of the kno\\Ti trails and
roads in the northern part of the coiuity, and Mr.
Scott was unable to furnish me with any informa-
tion about this mine. I questioned Sheriff Smith,
I believe his name is, and he was also unable to
furnish me with any information. I made inquiry at
the post office of Coloma and Pilot Hill. They are
on the highway between Placerville and Auburn;
they are west and slightly south of Georgetown. I
found that neither one of the three purported lessees
ever received mail at that ijlace, at least during the
time of the postmaster on duty. On September 5,
1936, I searched the I'ecords of the County Recorder
for Placer County, at Auburn, California, and foimd
no record that any claim had ever been filed. On
August 27, 1936, I questioned the Comity Surveyor :-
of Placer County and was unable to secure any in-
formation whereby I could locate the mine. On
S(i)t(Mn])e]' 11 and 12, 1936, in company with [52]
Secret Service Agent Charles Rich, we made a thor-
ough search of the territory along the middle fork
of the American River north of Georgetown and;
east of Forest Hill and Michigan Bluff, California.
Q. Did you make inquiries during the course of |
that trip?

United States of America 67

(Testimony of R. C. Lynn.)

A. Yes, we interviewed the road supervisor,
McFadden, I believe his name was, at Forest Hill,
who stated he was very familiar with all of that
territoi'v —

Mr. Coughlin: I submit that this is hearsay
testimony and I ask that the answer be stricken out.

Mr. Mc Williams : I submit it comes in under that
exception which permits the result of searches to
be admitted. We have authorities, if your Honor
desires them.

Mr. Coughlin: He is testifying now to what
someone else told him.

Mr. Mc Williams: I have that in mind.

Mr. Coughlin: That is not admissible.

Mr. Mc Williams: I anticipated that objection
and looked up the law, and we have the authorities
if necessary.

Mr. Coughlin: May I have an exception*?

The Court: Yes, the objection is overruled.
(Exception No. 8.)

I questioned the Forest Ranger on duty at the
Robertson Flat Ranger Station, which is a few
miles north of the Middle Fork of the American
River; we questioned the forest ranger at French
Meadows, Mr. Olinger; also in the same vicinity
where the alleged mine was said to be. I questioned
a miner working a claim out at the Goggins Mine
in that vicinity, walked approximately four miles
down to the end of the American River Canon, and
questioned three miners whom w^e found working

68 Bni A. Bost vs.

(Testimony of R. C. Lymi.)

in there on a small claim; we also searched the
Duncan Canon territory on the north [53] side of
the American River, and made inquiry in Michigan
Bluff and Forest Hill of numerous individuals.

Q. What was the result of those inquiries?

A. The result was we foimd no one who knew
anyone by the name of those indiAiduals whose
names appear on the purported lease. We found no
one who had heard of such a mining claim. We
learned that there had been a Hans Hanson located
at Michigan Bluff for several years. We located
this Hanson at Isleton Ferry, below Sacramento.
This man Hanson said that he had hunted and
trapped all through the territory north of George-
town a good many years, that he prospected a
claim —

Mr. Coughlin: I submit, respectfully, that this
is hearsay.

Mr. Mc Williams: Q. Did he know of any such
persons ?

A. He did not. That is all I recall of pertinent
information at this time.

(Thereupon a recess was taken until two o'clock
p.m.)

United States of America 69

H. L. HASTINGS,

was recalled as a witness for the Government.

Direct Examination.

(By Mr. Mc Williams)

Attached to the affidavits which have been offered
in evidence this morning are certain Railway Ex-
press tags. These tags came off the packages that
the Express Company delivered to us. They are
then fastened onto the affidavits. I keep tags with
the weight and description. The description is ac-
cording to the name on the affidavit. I make the
weight, myself on the scales of the gold. The dates
impressed with a rubber stamp are the dates that
we receive the deposit and weigh it.

Mr. McWilliams: I offer these documents in
evidence, your Honor. [54]

The Court: Very well.

(The documents were marked "U. S. Exhibit 5.")

I have brought with me the official records of my
department showing the fineness of that gold and
the number of ounces in the five shipments. These
entries are official entries of my department. All of
those entries w^ere made either by me or under my
direction. The particular entries dealing with the
five shipments that are described on the tags and
the affidavits are scattered through three different
books. I will give you the first one. The receipt num-
ber is 7779, which is on the top right-hand corner of
the affidavit. The name of the depositor is Ben A.
Bost; the description is a bar. Location Eldorado

70 Ben A. Bost vs.

(Testimony of H. L. Hastings.)
County, California, Deposit number A-915; the
weight before melting was 102.55 oimces, w^eight
after melting 102.51. The fineness of the gold was
.8481/2, fineness in silver .143; the pure gold content
was 86.976, and the silver content was 14.71. There
is a margin note here "89.15 Nevada City, Lucky
Gravel Claim, Cougar Canon." The fineness is taken
from the assayer's report. The weight comes from
me, the name and address from the affidavit, and
marginal note from the affidavit. Fineness means
the percentage of purity. Turning to the item 11,630,
depositor John A. Bost, Description, 1 Bar Gold,
Eldorado County, California. Deposit number
33,243; Weight before melting 79.50, Weight after
melting 79.43. Fineness in gold .847%. Fineness in
silver .144">/2. Fine ounces in gold 67.316. Fine
ounces in silver 11.47. And the same marginal note,
as the other one, "Lucky Gravel Claim." Address
Nevada City. The next one is 2917, Depositor John
A. Bost, Description : Amalgam cake. Deposit Num-
ber 3195. AVeight before melting 120.45. Weight
after melting 119.51. Fineness in gold .837y^ Fine-
ness in silver .153^2- Fine ounces in gold 100.059.
Fine oimces in silver, that is, pui*e silver, 18.34. Ne-
vada City, Lucky Gravel Mine. [55] Amalgam cake
is what miners usually call sponge; that is gold with
quicksilver which is retorted to remove the quick-
silver.

The next number is 16,470. Name of the Depositor
Ben A. Bost. Description, Amalgam Cake. Eldorado

I

United States of America 71

(Testimony of H. L. Hastings.)
County, California. Deposit No. 21,900. Weight be-
fore melting 97.12. Weight after melting 96.64. Gold
fineness .870. Silver fineness .122. Gold content
84.073. Silver content 11.79. Nevada City Lucky
Gravel Claim.

Next is No. 22,564. Depositor Ben A. Bost. De-
scription Amalgam Cake, Eldorado County. Deposit
No. 29,040. Weight before melting 124.25. Weight
after melting 121.94. Fineness in gold .853. Fineness
in silver .130. Fine gold content 104.014. Fine silver
content 16.58. Nevada City, Lucky Gravel Mine.

Thereupon

E. C. LYNN

was recalled for the Government.

Direct Examination
(Resumed)

(By Mr. McWilliams)

During the noon hour I have thought over the
items of the conversation I had with Mr. Bost and
foimd that I overlooked some. On my interview
with Mr. Bost on August 8, 1936, he mentioned that
the purported claim was on the public domain; in
answer to a question of mine he also stated that Mr.
Hensen had never told him w^here mail would reach
him. At my interview with Mr. Bost on Septem-
ber 18, 1936, I asked him why he claimed the gold
came from a mining claim in Eldorado County if he

72 Ben A. Bost vs.

(Testimony of R. C. Lynn.)

was not able to fix the place of Cougar Canon, or
the purported claim better than he had, and he said
the Lucky Gravel Mining Company was in Eldorado
County in his affidavits to the Mint, because the
three lessees told him that was the county the claim
was in. I asked him how [56] he arrived at the fig-
ures which he placed on the affidavits to the Mint
for total yardage or tons of earth and rock removed
for the production of the particular gold in a cer-
tain shipment to the Mint, covered by an affidavit,
and he said he always took the figures for that as
given him by Mr. Hensen at the time Hensen would
bring the gold to him. He told me that prior to the
time the proposed lease was dra^^Tl on January 2,
1932 he only had an oral agreement with Mr.
Swissler. When the request was subsequently made
for the execution of this lease by him to this group,
that they considered him the owner, he did not make
any explanation of that statement as to why they
considered him the owner. I asked him if he knew
where Hensen might be addressed, and he said he
never learned any mail address. I made notes at
these different meetings.

Cross Examination

(By Mr. Coughlin)

Mr. Bost discussed with me the trip to the claim
that he had taken in detail on September 38, 1936,
There were present Mr. Bost, myself, and Deputy
Collector of Internal Revenue Mr. Malloy. At that

United States of America 73

(Testimony of R. C. Lynn.)

time I made a pencil memorandum. As I recall, he
said that Hensen had the jacks at Rattlesnake
Bridge to go into the canon on. I did not ask him
the number. He said it took seven hours or more,
possibly longer, for him and Hensen to arrive at the
claim after they got on the mules. He said he re-
mained at the claim that succeeding day and de-
parted at night fall the next day. He said they re-
turned by jacks. I did not question him about the
return. I do not believe he told me who came out
with him. I did not have any discussion with him
relative to the weather conditions except to the ex-
tent I asked him what time of the year it was, and
he said it was in the fall, when there was frost on
the ground. He did not state [57] what month.
When he arrived upon the claim he said he had
spent the day there and Hensen showed him about
the ground. As I recall, he said the workings were
next to a small stream in the canon from which the
men procured the drinking water, and that he was
in a tunnel. I believe he said the tunnel was ap-
proximately 1000 feet long. I do not believe that he
mentioned whether or not there were conveyances in
the foi'm of a track or car in the tunnel. He said he
saw only the men Swdssler and Hensen. I do not be-
lieve he mentioned a man by the name of Peterson.
There were three besides Mr. Bost who were parties
to the lease, Bost, Swissler, Hensen and Larsen.
Larsen was not mentioned relative to being at the
claim at the time that Mr. Bost was in there. He

74 Ben A. Bost vs.

(Testimony of R. C. Lynn.)

said the first time he ever saw Larsen was when the
three came to his home at the time the lease was
drawn. I do not believe he explained just what oc-
curred at the mine on the day that he was there with
reference to the claim, or whatever it was, with
reference to any operation on that day. I do not be-
lieve there was anything said by Mr. Bost relative
to him taking any specimens or pannings of gravel.
I believe he told me Hensen always brought the gold
in sponges or amalgam cake form, retorted. As to
the manner in which he would finance the payment
of Hensen for the lessees' share I asked him if
Hensen would wait until the return had been re-
ceived from the Mint and Bost said he would not,
that Mr. Hensen would not wait, that he and Mr.
Bost estimated the value of the gold and he would
pay Hensen thereupon 90 per cent, of such estimated
value; that if he did not have enough money on
hand he would borrow sufficient fimds from some of
his relatives and then reimburse the relatives when
he received his returns from the Mint. I had a dis-
cussion with him as to the last time that he saw Mr.
Swissler. I do not recall definitely whether that was
on August [58] 24 or September 18. Mr. Bost said
the last and only time he had seen Swissler before
the lease was drawn was approximately three years
prior to the date I was questioning Mr. Bost, when
Swissler came to his home in Nevada City. He told
me that was the last time that he saw Swissler. He
told me where he first knew Swissler. He said he

United States of America 75

(Testimony of R. C. Lynn.)

had met him in Trinity Comity about 1886. He said
that approximately five or six years prior to 1936
Swissler came to him and said that he had located a
profitable claim and needed some money to start
work, and Mr. Bost said that he had advanced Mr,
Swissler several hundred dollars. He did not say
that he thereafter advanced some more money.
When I questioned him as to the approximate
amount he had advanced, the total, he fixed the fig-
ure as approximately $500, and nothing was said
whether that had all been advanced at the same time
or over a period. I did not question him when he
! made the last advance. There was not an\i:hing said
; about him making an advance at the time that he
j went over to the claim. As to the arrangement be-
1 tween him and the other men, with reference to the
o\\Tiership of the claim, as I recall, he only said at
' the time they came to him and wanted to draw a
j lease they said they considered him the owner. The
j reason for considering him the owner was not dis-
cussed. After I had talked to Mr. Bost I then pro-
I ceeded to make certain investigations relative to
Avhether or not this claim was recorded. T went to
Rattlesnake Bridge. From there I went in the di-
rection that Mr. Bost had described. The conversa-
tion with Mr. Bost on September 18 was after I had
.made various attempts to locate the mine. T told him
,!at that time I could not locate it. I don't know as I
told him exactly where I had gone. I told him I had
made a search for it and that I could not find it. I

76 Ben A. Bost vs.

(Testimony of R. C. Lynn.)

told him that I had not been able to locate it;
whether or not I told him who, or if I discussed it
with other persons or not, I would not say for sure.
I would not say I did or [59] did not. Possibly I
did. I can't say what he said, because I don't recall
if I told him. When I told him that I was miable to
locate it I then told him that I wished to ask him
further questions about it, and he said he would
answer them. That is when the sworn statement was
taken. In my discussion with him relative to his trip
with Hensen to the claim I do not recall that he
mentioned that the tunnel that was there was a
tunnel that was recently constructed, or that it was
an old abandoned one. I do not recall discussing
whether or not the tunnel was the result of the pres-
ent development.

The next witness for the Government was

LAWRENCE BONES,

who testified under oath as follows :

Direct Examination
(By Mr. Murman.)

I have been residing in Eldorado County since
1888, and reside in Georgetown and vicinity. I have
mined and prospected north of Georgetown. I have
never during that period of time heard of Cougar
Gulch or Cougar Canon, or the Lucky Gravel claim.

Q. Did you ever hear of Hans Hensen, G. A.
Swissler or Larry Larsen?

United States of America 11

(Testimony of Lawrence Bones.)

A. No.

Mt'. Cougblin: To which we object on the gronnd
it is immaterial, irrelevant, and incompetent, and
calls for the opinion of the witness, and is hearsay.

The Court: Overruled.

Mr. Coughlin: Exception.

(Exception No. 9.)

I am now residing in Georgetown and am fa-
miliar with the mining that is going on there. [60]

Cross Examination

(By Mr. Coughlin.)

There are mining claims in the vicinity of George-
io^\n where I prospected that have been abandoned.
I could not tell you the names of all of the aban-
doned claims. However, there are claims in there
that have been abandoned.

The next witness called for the Government was

CLARENCE COLLINS,

who testified under oath as follows :

Direct Examination

(By Mr. Murman.)

I am a garage owner and service station owner in
Georgetown, Eldorado County. I am connected in an
official capacity wdth the county as Deputy Sheriff.
I have been Deputy Sheriff for about three years. I
have been residing in Georgetown and doing busi-

78 Ben A. Bost vs.

(Testimony of Clarence Collins.)
ness there since 1922. During that period I have had
occasion to go into the surrounding country. As a
Deputy Sheriff and in carrying on my business I
have covered the biggest part of the district, that is,
the Georgetown District. I have never run across or
heard of Cougar Canon, or any mining claim kno"WTi
as the Lucky Gravel claim. I have never heard of
Hans Hensen, G. A. Swissler or Larry Larsen as
miners in that district, or in any way to my recol-
lection. I have resided in that district continuously
for all the time I have told you about.

Cross Examination

(By Mr. Coughlin.)

Swissler, or Hensen or Larsen could have been
there and I not know about it.

Redirect Examination

(By Mr. Murman.)

The population of Georgetown, itself, is approxi-
mately 400. [61] The population of Eldorado Comity
is about 8000. I believe I would know all of the
miners in that vicinity at the time I have re-
ferred to.

United States of America 79

The next witness for the Government was
ELMER C. OGLE,
who testified under oath as follows:
Direct Examination

(By Mr. Munnan)

I am a miner and a mail carrier. I reside abont
eight miles north and east of Georgetown by trail,
in the vicinity of Volcanoville, Eldorado County. I
have lived in that district about tw^enty-nine years.
During that period of time I have been occupied as
a miner and pai't of the time as mail carrier and
have traversed the surrounding country, T should
say within an eight or ten-mile radius of Volcano-
ville. Outside of that particular area, I was never
in there prospecting, but I have been over the coun-
try as a hunter. I believe that nearly every miner
that comes into that country comes do\Am to our
place to inquire about the country; they generally
hunt me up to get information. I never heard of
Cougar Canon or the Lucky Gravel claim.

Q. Did you ever hear of Hans Hensen or G. A.
Swissler, or Larry Larsen as miners in that area?

Mr. Coughlin : We will interpose the same objec-
tion as we have heretofore.

The Court : Overruled.

Mr. Coughlin : Note an exception.
(Exception No. 10.)

A. No.

I have been mining for twenty-five years, and dur-
ing that period of time have mined gravel claims as

80 Be7i A. Bost vs.

(Testimony of Elmer C. Ogle.)

well as quartz claims. [62] During that period of
time, the last five or six years, I should judge, I
have handled three or four thousand yards at least.
A yard of gravel is about comparable to 1% tons. In
handling that quantity of gravel I have separated
the gold from the gravel and have disposed of the
gold. I have noticed the proportion of the quantity
of gold to the cubic yard of gravel.

Q. Are you familiar also with other mining ac-
tivities in the vicinity where quantities of gravel
have been handled besides the quantity that you are
particularly familiar with'?

A. Well, during my time there has not been very
much gravel mining outside of our own.

Mr. Coughlin : We ask that the answer be stricken
out on the ground it is not responsive.

The Court: Denied.

Mr. Coughlin: Exception.

(Exception No. 11.)

The Court : Q. You say there has not been much
gravel mining outside of our o^^Tl. What do you
mean?

A. I mean there has been no real mines or no
real producers since I came to the country, outside
of our own.

Q. The mine you own ?

A. The mine we own.

Mr. Murman: Q. What do you mean by ''real
producers'"?

United States of America 81

(Testimony of Elmer C. Ogle.)

A. Well, something that a man can make a living
out of.

Q. How much would that run per cubic yard?

A. It would run all the way from 10 cents to 50
cents a yard.

Mr. Coughlin : I am going to ask that that answer
be stricken out and my objection go before the
answer.

The Court: I am wondering why you want that
stricken out.

Mr. Coughlin: Why question this man about this
matter at all?

The Court: He is trying to qualify him as an
expert on placer mines or gravel mines. [63]

Q. Have you worked in other gravel mines in
that coimtry?

A. No, not in gravel mines, I have in quartz.

Q. The only gravel mine you know about is the
one you work, yourself?

A. The one I work, myself.

Mr. Murman : Q. You say that is the only gravel
mine in that vicinity that you know of?

A. That is at the present time no, there is gi'avel
mining, but that is the only mine that has been
worked on a profitable basis in that vicinity since
we came into the country.

The Court: Q. When was that? When did you
come into the country?

A. 28 years ago.

82 Ben A. Bost vs.

(Testimony of Elmer C. Ogle.)

Mr. Murman : Q. Mr. Ogle, basing your answer
upon yonr experience and knowledge of mining, will
yon state to the Court and Jury what the average
production per cubic yard of gravel or per ton of
ore is in that vicinity?

Mr. Coughlin: Just a moment, we object to that
on the ground it calls for the conclusion and opinion
of the witness and the proper foundation has not
been laid.

The Court: Sustained. I do not think the proper
foundation has been laid.

The next witness for the Government was
ROBERT MURDOCK,
who testified under oath as follows :

Direct Examination
(Bv Mr. Murman)

I am a lookout for the Forest Service the greater
part of the year, for the United States Government.
I am stationed at the present time about fourteen
miles east of Georgetown by road. I have been on
that station about sixteen seasons, consecutively. My
station is called Lookout Station, the elevation is
4613 feet, [64] and I have a clear view of the sur-
rounding country. Looking west when there is no
fire to make a smoke screen we can see clear across
the Sacramento Valley there, which I would say is
about fifty miles, and looking east you can look as

United States of America 83

(Testimony of Robert Murdock.)
far as the Sierra Nevada Range, twenty miles. That
is the highest point going east from Georgeto\^Ti
until you get higher in the Sierra Nevada Moun-
tains, where there are three or four other lookouts
higher than that. A? lookout for the United States
Forest Service I am required to have a knowledge
of the surrounding topography of the country. From
the point I have designated as my lookout j)oint I
would say I was entirely familiar wdth the sur-
rounding country in a radial area of 15 miles. Be-
yond that immediate vicinity that I am entirely
familiar with I have a knowledge of a further dis-
trict in some direction. I have never heard of
Cougar Canon in that vicinity, or the Lucky Gravel
claim. I see a few prospectors and miners but I do
not get acquainted with a great many of them. I
have ncA^er heard of or met Hans Hensen, G. A.
Swissler or Larry Larsen.

Cross Examination

(By Mr. Coughlin.)

I see prospectors and miners in the vicinity about
Georgetown but not from the station occasionally. I
see men there whose names I do not know\

Redirect Examination

(By Mr. Murman.)

When I am not on the lookout station I live in
I Georgetown. I have not only been occupied with my
'business in that way, but I have resided there for
ten years. [65]

84 Ben A. Bost vs.

The next witness foi' the Government was
WILLIAM CAMPBELL,
who testified under oath as follows:

Direct Examination

(By Mr. Mnrman)

I am just a laborer. I am mining a little, that is,
working in a quartz mine. I have done some mining,
always in Placer County. Placer County adjoins
Eldorado County. I reside in Forest Hill. I have
been there about ten years and have been on the Di-
vide all my life, right close in that vicinity. I am
not familiar with Eldorado County. The Divide is
Forest Hill and all those little mining towns around
there. I should say Forest Hill would be about some-
where around twenty miles from Georgetown. As
the crow flies, it is pretty near south. During the
time I have resided there in the vicinity of George-
town I never have heard of Cougar Canon or the
Lucky Gravel claim.

Q. Have you ever run across a man by the name
of Hans Hensen, G. A. Swissler, or Larry Larsen.
miners in that area?

A. No.

Mr. Coughlin: Just a moment. We object to that
on the ground it calls for a conclusion or opinion as
to whether he ever run across them. There is no
foimdation laid here to show that this man may
have known them.

United States of America 85

(Testimony of William Campbell.)

The Court : He has lived on the Divide all his life.
Overruled.

Mr. Coughlin : Exception.

(Exception No. 12.)

Cross Examination

(By Mr. Coughlin)

I do not know the names of all of the prospectors
who prospect or mine in Eldorado County. {JoQ~\

The next witness for the Government was
EDWARD N. RAINES,
who testified under oath as follows :

Direct Examination

(By Mr. Murman)

I am on lookout at the Forest Service up there in
the summer time. When not working as a lookout
I reside at Forest Hill, which is about twelve miles
north of Georgetown, across the American River in
Placer County. My station is about fifteen miles
from Bald Mountain, where Murdock was. In my
business as lookout at that point I am pretty much
familiar with the topography ; I am familiar with it
to the west quite a distance, down toward Sacra-
mento, Roseville and Auburn, which would be about
50 miles, east about 12 to 15 miles, and south quite
a distance. I have done mining up there on my own

86 Ben A.Bostvs.

(Testimony of Edward N. Raines.)
behalf and am familiar with some of the old mines
in that area. T am not familiar with the present
workings a great deal ; there is not very mneh pres-
ent working going on, only snipers: they are fellows
that are working in canons and places where they
might find something. Most of the mining in Placer
County, the gravel mining is in the creeks. During
the depression quite a lot of snipers came in; that
goes back six or seven years. I do not know of any
sniper operations or other operations on a claim
known as the Lncky Gravel claim; I don't know
wdiere that is, I never heard of that claim at all. I
never ran across any snipers or miners by the name
of Plans Hensen, G. A. Swissler or Larry Larsen.

The Court: Q. Did you ever hear of Cougar
Canon ?

A. Yes.

Q. "VAHiere is Cougar Canon?

A. Well, now, you have got me; when T was a
young man there was some hunters in there, and
they had a dog that got pretty well scratched up
with a California lion, and it was said that that hap-
pened in Cougar Canon. A couple of years ago they
asked me where Cougar Canon was and I told them
T [67] thought Cougar Canon was tributary to Long
Canon, and then I asked somebody else and they
seemed to think it was tributary to Duncan Canon;
that was a couple of years ago, w^hen this question
was ])ut up to me about Cougar Canon.

Q. Who put it up to you ?

United States of America 87

(Testimony of Edward N. Raines.)

A. Somebody from the Forest Service asked me
over the phone.

Q. In wliat county?

A. In Placer County, in the Forest Hill District.

I have never seen a place called Cougar Canon.
Outside of the fact that I heard of it when I was a
boy and had this call over the telephone I never
heard of it in late years at all. I have lived in that
vicinity all of my life.

Q. Mr. Raines, in the Cougar Canon which you
mentioned to the Court, have you ever heard of any
mining in that canon ?

A. Well, that is a question, because I don 't really
know where that is, whether it would be in Long
Canon or Duncan Canon. I never heard anybody say
they were mining in Cougar Canon. The only time as
I say I ever heard about Cougar Canon was when
these hunters had that dog scratched up. That was
when I was probably ten years old, 48 or 50 years
ago. In the intervening period of time up to the
time I had a call on the telephone about it I never
heard of it. They asked me where it was and I told
them I thought it was tributary to Long Canon, and
they seemed to think it was tributary to Duncan
Canon. I would not say when I received that call
over the telephone, whether it w^as two years ago or
when. It was not this last season, it was either a
year ago or possibly two years ago.

88 Ben A. Bost vs.

(Testimony of Edward N. Raines.)

Cross Examination j

(By Mr. Coiighlin.)

The time I got the call it was being talked around
of where Cougar Canon was, and some other person
had the idea it was [68] up by Duncan Canon. I ,
always had the impression it was connected with ]
Long Canon. I know where Rattlesnake Bridge is;
Long Canon w^ould possibly be 30 miles from Rattle-
snake Bridge. T had the impression that Cougar
Canon was over in the vicinity of Long Canon. I do
not know whether there have been mining opera-
tions over in Long Canon. I did not get acquainted
with any of the snipers and miners because I was up
higher, and if someone did not feel sorry for me and
come up to see me I would not see anybody. I know
the Griffin Mine over in Long Canon ; that was quite
a mining operation years ago; it is pretty much
deserted now.

Redirect Examination
(By Mr. Murman.)

With regard to Cougar Canon that I have re-
ferred to, I don't know how many persons told me
that it was in the vicinity of Duncan Canon ; no
more than one or two; and I could not even remem-
ber who it was that told me it was in Duncan Canon.
I do not think it was in the message that T received
over the telephone that the reference was made.
From where I was located in the summer months, in
order to get to Long Canon oi- Duncan Canon you

United States of America 89

(Testimony of Edward N. Raines.)
would have to go by automobile or horses or some
way down the road. There is no road down to the
canon. There are roads on the ridges that come on
the high gromid between the canons. There is a road
that crosses at French Meadows across the Little
Fork of the American River, and comes out at
Georgetown. There are lots of roads between Rattle-
snake Bridge and Long Canon. There are roads lead-
ing from Rattlesnake Bridge connecting with the
roads on the high portions of those canons. You
could go by automobile as well as by horseback or
any other way. That would be in the summer
months. In the winter months you w^ould not be able
to do that. If you got in the high mountains in the
snow you might have to go in some other way. In
[69] the summer months you could use the roads. In
going from Rattlesnake Bridge up to Duncan Canon
and Long Canon you would have to cross the county
roads if you followed the ridges.

The next witness for the Government was
E. L. SCOTT,
who testified under oath as follows :

Direct Examination
(By Mr. Murman)

I am County Assessor of Eldorado County, and
have been since January, 1923. I have resided in

90 Ben A.Bostvs.

(Testimony of E. L. Scott.)

Eldorado County since 1898. My residence has been
continuous up to the present time, with the excep-
tion of a})out four months in the year 1903, T be-
lieve. During that period I have never heard of
Cougar Canon or the Lucky Gravel claim. I never
heard of Hans Hensen, G. A. Swissler or Larry
Larsen ; I don't remember those names. I am fa-
miliar with the assessment rolls of the county; they
are kept under my supervision and in my custody.
There has not been any tax assessment on any such
claim as the Lucky Gravel claim in Eldorado
County; there has not been any tax assessment
against any individual by the name of Hans Hensen,
G. A. Swissler or Larrv Larsen or Ben A. Best.

The next witness for the Government was
HENRY LAHIFF,
who testified under oath as follows :

Direct Examination
(By Mr. Murman)

At the present time T am County Surveyor of
Eldorado County. I have resided down in Auburn,
Eldorado County for aliout 40 years. I have been
away for three or four years down in Santa [70]
Cruz and over in Euro]^e for a year and a half. The
})ulk of the time the last four years I have resided
in Eldorado County. I have been County Surveyer

United States of America 91

(Testimony of Henry Lahiff.)

for the last three terms, about fourteen or fifteen
years. I am very well acquainted with the vicinity
of the coimty around Georgetown. I have not been
in Volcanoville for over twenty years, but I am fa-
miliar with the country up there. Basing my opinion
upon my familiarity with the country, there is no
canon that I know of called Cougar Canon; there
may be canons called Cougar, which probably would
be some local name, but in my forty years residence
in Eldorado County I have never heard of Cougar
Canon. I have never run across a claim knowTi as
Lucky Gravel claim. I become familiar with miners
in the Coimty during my incumbency as County
Surveyor. I never heard of any miners by the name
of Hans Hensen, G. A. Swissler and Larry Larsen.
I never heard of a man by the name of Ben A. Bost
owning a mining claim in Eldorado County.

The next witness for the Government was
JOHN A. SHIELDS,
Avho testified under oath as follows :

Direct Examination
(By Mr. Murman)

I am County Surveyor of Placer County, Califor-
nia, and have been about sixteen years. I have re-
sided in Placer County during that time and prior
to that time. Prior to being Coimty Surveyor I fol-
lowed general engineering work for many years,

92 BenA.Bostvs.

(Testimony of John A. Shields.)
and also mining. As Connty Surveyor I am familiar
generally with the topography of Placer Coimty, and
have some familiarity with the adjoining coimty,
Eldorado, where it immediately adjoins Placer
County. I w^ould say Forest Hill in Placer County
and Georgetown in Eldorado County were about
equidistant from the [71] dividing line of the two
counties. Those two places, as the crow flies, T would
say are about twelve miles apart. I have never heard
of Cougar Canon in Eldorado (\)unty or Placer
County, nor of a mining claim in that area kno^^Ti
as the Lucky Gravel claim. I have been more or less
familiar with the mining actiWties and have met a
great many miners during the time T have gained
my familiarity with mining activities. T have never
heard of or run across Hans Hensen, G. A. Swissler,
or Larry Larsen; I never heard of Ben A. Post, a
miner, in that area.

Cross Examination
(By Mr. Coughlin.)

I don't know, as a matter of fact, whether a man
by the name of Swissler ever conducted any mining
operations in Eldorado County or not. He could
have and I not know it.

United States of America 93

The next witness for the Government was
J. C. ACKLEY,
who testified under oath as follows:

Direct Examination
i (By Mr. Mnrman.)

I I am in the general merchandise business in
I Georgetown, Eldorado County. I have been a
I merchant there since 1909 ; I have been in that sec-
j tion much longer than that. I have been in that
I section since 1895. I was in Volcanoville for a num-
I ber of years ; that is in the same county. I am fairly
well acquainted with the surrounding country
around Georgetown. I have sold merchandise to peo-
ple in that area. I was fourteen years ago in Vol-
canoville and I had a store there, too, that is eight
or nine miles north of Georgetow^n. I never have run
i across Cougar Canon in that area, never heard of it.
! I never have run across a mining claim or heard of
I a mining claim known as the Lucky Gravel claim.
I In [72] my general merchandise business in George-
town I have sold supplies to various miners and
have met most of them, I should say. I never did
much grubstaking. I have never met Hans Hensen,
G. A. Swissler or Larry Larsen, miners in that area,
! and I have never known of Ben A. Bost, miner in
that area.

Cross Examination
: (By Mr. Coughlin.)

I do not know^ how far Georgetown is from
Rattlesnake Bridge, exactly. I would say it was

94 Ben A. Bost vs.

(Testimony of J. C. Ackley.)

about 12 miles. It would be farther than that by the
highway. In a direct line it would be ten or twelve
miles. I could not say that a man by the name of
Swissler did not engage in. any mining activities in
Eldorado County in the last seven years. As to a
man by the name of Hans Hen sen engaging in such
activities during that time, all I could say is I never
knew anyone by that name. They could have been in
there and I not know it. In fact, people come in
there I do not know.

Redirect Examination
(By Mr. Murraan.)

I don't think it would be very long for a person
to be in the vicinity of Georgetown mining and buy-
ing supplies before I would become acquainted with
him. If he was doing any extensive mining I would
say I would know him, more so than if he was a
prospector^ you see, then, they might be there for a
longer time and I know them ; at least, I might see
them and not know their name.

The next witness for the Government was
SARTOR J. FRANCIS,
who testified under oath as follows:

Direct Examination
(By Mr. Murman)

I am a butcher in Georgetown. I was bom and
raised there, [73] and have been a butcher over

United States of America 95

(Testimony of Sartor J. Francis.)
thirty years. I had occasion as a boy, and later on,
to go into the surrounding country. I am familiar
with the countr}^ around Georgetown, up about fif-
teen miles and beyond that, I have been clean up to
Lake Tahoe horseback ; all over that country. I have
tramped through the country. I have a place about
40 miles from Georgetown on the moimtain range
up there ; that is northeast from Georgetown. I have
never nm across Cougar Canon during my tramps
in that area. I never heard of Cougar Canon. I
never heard of a mining claim in that area known
as Lucky Gravel claim. I have met quite a few
miners that w^orked around Georgetown; a number
of them trade at my shop. That includes the years
1934 and 1935, and also earlier, going back to 1929
and '30. During that time I never heard of a miner
or several miners known as Hans Hensen, G. A.
Swissler and Larry Larsen. I never heard of Ben

A. Bost, a miner in that area.

!

Cross Examination
(By Mr. Coughlin)

I might not have heard of Mr. Swissler being in

there, but he could have been there without my

knowing it, but he could not have stayed very long.

J I generally get acquainted wdth a lot of those fellows

1 that come in there. It has happened that men came

in to mine that I did not know.

96 Ben A. Bost vs.

The next witness for the Government was
CHARLES B. RICH,
who testified under oath as follows:

Direct Examination
(By Mr. Mc Williams)

I am an agent of the United States Secret Service
and have been connected with the United States
Secret Service eleven years. The United States
Secret Service protects the Mint [74] against thefts
and embezzlements, violations of the regulations that
pertain to the thefts of gold, embezzlements of gold,
and my duties cover counterfeiting. I am the Mr.
Rich who was referred to by Mr. Ljrrm. I accom-
panied Mr. Lynn on the search that he made in the
vicinity of Georgetown and north of Georgetown for
this alleged Cougar Canon. We started out first at
Forest Hill, which is about twelve miles on the
Georgetown road, that is the one that goes across
the canon from Georgetown northeast, and about
twenty some miles by road. We then went into
Georgetown, made inquiry at the post office, and met
a supervisor by the name of McFadden, and we in-
quired of him concerning any information he could
give us of Duncan or Cougar Canon, or of the
Lucky Gravel claim; we also inquired the way to
Long Canon and to Duncan Canon. After receiving
those instructions we proceeded to the station just
under Duncan Peak; from there we went into a
place known as the Big Trees, about nine miles from
this ranger station. We then went down a trail at-

United States of America 97

(Testimony of Charles B. Rich.)
tempting to get into Duncan Canon and attempted
to locate a man who had a mine. We next went into
the place by French Meadows, which is on the same
road, about twenty miles further along. Mr. Jjynn
and myself came down from a place called Smith
House, I believe it was, went dow^i the American
River again, trying to get into Dimcan Canon, and
we were unsuccessful. We made inquiries of miners,
anyone whom we came across en route to this place,
attempting to locate the Lucky Gravel claim, or
Cougar Canon. We made inquiry concerning anyone
by the name of Swissler, or Hensen, or Larsen, and
asked them if they knew anything of a man by the
name of Bost, who owned a claim over in that par-
ticular section. We were unable to find either the
mine or the canon. I made an inspection before that
with Inspector Bongard. Mr. Bongard is the high
grade inspector for the State Division of [75]
Mines. Mr. Bongard and I started our investigation
from Placerville. Mr. Bongard was assisting the
Grovemment and the Government was assisting him ;
in other words, we vrere working in conjunction. We
searched the records of the Assessor's Office, con-
tacted the County Surveyor of Placerville in an
effort to locate Cougar Canon and the Lucky Gravel
claim ; we searched the voters ' record and the assess-
ment record for Swissler, Hensen and Larsen, that
were shown on the purported lease of Mr. Bost, also
for Mr. Bost, and being unable to find any informa-
tion there we proceeded to Georgetown, where we

98 BcnA.Bostvs.

(Testimony of Charles B. Rich.)
made inquiries of various people that have testified
here; we talked with every person that we came in
contact with, trying to find Cougar Canon and the
Lucky Gravel claim. We then went on to Volcano-
ville, w^here we interrogated the postmaster and had
all the records searched at the post office, and also
inquired of Mr. Ogle and his brother if they could
give us any information of Cougar Canon or the
Lucky Gravel claim. We were imable to find any-
thing. We then went on to a mine which was right
at the head of Duncan Canon, I cannot recall the
name of it. We then went into French Meadows and
talked with Mr. Olinger, of the Forest Service, who
had been in that country for seven years, attempt-
ing to get the location of Cougar Canon or the mine,
and were unable to do so. We w^ent on around Forest
Hill and interrogated everyone we came in contact
with, both rangers and cowboys, and everybody else,
and were unable to get any information concerning
Cougar Canon or the mine. When we arrived in
Forest Hill we talked over the telephone to Mr.
Raines. At that time I do not recall that he could
give me any information about Cougar Canon. We
contacted other people in the vicinity of Forest Hill,
amongst them a man by the name of Bisbee, who
thought he might have heard of the canon, such as
Mr. Raines described, and told us that he would he
able to take us into it. [76] However, he never could
do so. No one in all of our travels could give us any
information as to the location of the Lucky Gravel

United States of America 99

(Testimony of Charles B. Rich.)
mine, or Cougar Canon. At that particular time we
spent two clays on that search. During* the period
from the 27th of August until the middle of No-
vember we were continually on this case and other
cases of the same nature, and we made inquiry of
nearly all the people we came in contact with, at-
tempting to locate this particular canon and mine
in that vicinity. We were not in that same vicinity
every day. We were in Garden Valley and in
through the section which lies between Georgetown
and Forest Hill, and made inquiries there; we
checked Avith officers, we checked with everyone we
thought could give us any information as to Mr.
Swissler, or Mr. Plensen, or Mr. Larsen. and tried
to find the location of the Lucky Gravel claim and
Cougar Canon, without any success whatever. T
know where Mr. Bost's place of business was in Ne-
vada City.

Q. What was the character of the establishment
that was being operated by him at th,at time in Ne-
vada City?

Mr. Coughlin: To which we object on the ground
it is immaterial, irrelevant, and incompetent, no
time, place, or anything else fixed.

The Court : Overruled.

Mr. Coughlin: Exception.

(Exception No. 13.)

Right after he was arrested on the 30th of Sep-
tember Mr. Bongard and myself called on him at

100 Ben A. Bost vs.

(Tostimony of Charles B. Rich.)
Nevada City, at which time I requested him to allow
me to look in his place of business. He invited us in,
and personally pointed out the office and the back
part of the office. The front part of the office con-
sisted of a desk and safe, and a pair of gold scales,
scales you weigh gold on; immediately in the rear of
it was a small room which contained a melting
furnace and grinder, an electric equipped grinder. A
[77] grinder is a mill which consists of a roimd iron
or metal sort of tube. In this is mounted a machine
Avith little shoes on it. This is run by electricity. Ore,
after it has been gromid to a certain fineness, is put
in that mill, the electricity is turned on and it is
ground to a very fine consistency. I may be wrong
in that description, but the result of that is a mixed
quicksilver bath and the gold is amalgamated from
the ore that is in that bath.

Q. Do you know why the grinder is used?

A. I do.

Q. Do you know—' ' Yes " or * ' No " ?

A. Yes.

Q. Will you tell the jury?

A. The grinder is used to grind quartz rock.

Q. What kind of quartz rock?

A. Quartz rock which bears the gold.

Mr. Coughlin: I object to that.

The Court : Overruled.

Mr. Coughlin: Exception.

(Exception No. 14.)

! United States of America 101

(Testimony of Charles B. Rich.)

It could be used for either low-grade or high-
grade. It is usually used for high grade. I am testi-
fying from mj own knowledge.

Cross Examination
(By Mr. Coughlin.)

I did not see this grinder used at any time for
the purpose of grinding in Mr. Bost's place. I met
Mr. Bisbee at Forest Hill. I talked with Bisbee with
reference to Cougar Canon. He told me that he be-
lieved he knew where there was a canon that had
been called Cougar Canon. Then I had him try to
take me there and he could not find it. He said he
believed he knew of the canon. He took us down be-
low the big trees, that is, Mr. Lynn and myself,
down into a canon of the American River w^here
[78] he said he thought that a trail w^ould take us
into it. He looked for the trail. I never found the
trail. I believe that was on the second trip, it was
sometime about the 11th or 12th of September. That
was before I talked to Mr. Bost. I did not discuss
that with Mr. Bost at the time I talked to him, I
did not tell him T had tried to find this canon, nor
that Mr. Bongard and I had been endeavoring to
locate the canon. That w^as in 1936, in September.
We w^ent into Long Canon. There are several mines
in Long Canon. That is a long territory. We did not
cover the w^hole length of Long Canon, only that
part W'hich was adjacent to Georgetown. I w^ould
say Long Canon is about twenty-five miles long. We

102 BenA.Bostvs.

(Testimony of Charles B. Rich.)
were walking in there. I saw in Long Canon what
is known as the Goggins Mine, that is the one I
could not remember.

(Thereupon an adjournment was taken until
Wednesday, November 24, 1938.)

CHARLES B. RICH

testified as follows:

Redirect Examination
(By Mr. McWilliams.)

Q. Mr. Rich, on your cross-examination you
were asked by Mr. Coughlin whether you had cer-
tain conversation with Mr. Bost along certain lines,
or whether or not you did tell him certain things,
and you said no. Will you explain why those matters
were not gone into?

A. Mr. Bongard and I called on Mr. Bost, as I
testified, for the purpose of talking to him, and we
started to ask him some questions, and he said he
did not care to answer any questions, he would state
it to the Court Avhen the time came.

Recross Examination
(By Mr. Coughlin.)

Q. Mr. Rich, I believe you testified yesterday
with respect [79] to what you designated as a
grinder in Mr. Bost's assay office. You also saw the
scales of the assayer there, too, didn't you?

United States of America 103

(Testimony of Charles B. Rich.)

A. I saw large gold scales, a large balance they
weigh the gold with.

Q. Used by assayers ?

A. Well, it is used by assayers and gold buyers.

Q. Yon know that Mr. Bost had been engaged in
the assaying business in that county, don't you?

A. Yes.

Q. And you know that he had also been engaged
as a licensed gold buyei- in that county, don't you,
up to 1931?

A. Yes. I do not know that, I have no knowledge
except from the records.

Q. But you learned that from the records'?

A. Yes.

Q. You also learned that he had been engaged in
the assaying business up to about 1934 ?

A. Yes, that is correct.

Q. You referred to the fact that some particular
machine or apparatus there was connected with,
that is, there was electricity referred to in connec-
tion therewith by you.

A. I believe that I testified that the mill was
ordinarily run by an electrical motor.

Q. Did you examine this to see if there was any
electrical connection therewith at the time you were
there f

A. N05, not especially.

Q. Then, as a matter of fact, you don't know
whether it was connected up electrically or not?

104 Ben A. Bost vs.

(Testimony of Charles B. Rich.)

A. I could not say that. It could have been run
by electricity, or a gasoline engine, or water power.

Q. Well, as a matter of fact, did you determine
during the time when Mr. Bost was actually en-
gaged in operating that prior to the time when he
ceased his assay business that it was run by a water
wheel ?

A. I was informed by Mr. Bost that it was, yes.

[80]

The next witness called by the Government was
CLYDE M. LATZURE
who testified imder oath as follows:

Direct Examination
(By Mr. McWilliams)

I am a mining engineer employed by the State Di-
Aasion of Mines. I have been connected with the
State Division of Mines since 1917 as district min-
ing engineer. I graduated from the School of Mines
in Metallurgy, from the University of Missouri, in
the class of 1905, and I have been in that business
ever since. My duties in my present position are
partly office duties and partly field duties. My field
duties are connected with ^dsiting the various
coimties in my district, and securing the mines and
mineral resources of them. In that connection I
usually visit the Recorder's Office and list all of the
claims recorded there for our records. In order to

United States of America 105

(Testimony of Clyde M. Laizure,)
keep our records as complete as possible on all of the
mineral resources and mining claims in the State we
usually check with the Assessors, with the County
Recorder's Office, and list all of the claims that are
on their tax list, assessment list, and in the Re-
corder's Office the location of them, and the owner-
ship, to whom they are assessed. I have done that
whenever I have been in the tield. As a mining en-
gineer the dimensions of the average mining tunnels
in the State of California in the Sierra Nevada
Moimtains vary considerably; about 5 by 7 feet
would be about the average. Assuming a tunnel in
the mountain a thousand feet deep, with that aver-
age tunnel 5 by 7, an approximate estimate of the
cubic yards of material taken out would be 35,000
cubic feet. After that ore is taken out from the
tunnel there is ordinarily an expansion in volume;
broken ore is always expanded in volume, 25 to 40
per cent., de})ending on the character of the ma-
terial. As a result of my experience with the mining
industry in this State, I should [81] say that a min-
I ing property that produces over a considerable
period of time gold rmniing .56 ounces per yard, re-
ferring to gravel mine, is highly valuable.

Cross Examination
; (By Mr. Coughlin)

Eldorado County is not in my district. I have no

j record of how many mining claims are recorded in

Eldorado County. In the State of California mining

106 Ben A. Bostvs.

(Testimony of Clyde M. Laizure.)
claims have been recorded ever since 1849, in the
different recorders' offices, and many of them have
been recorded over and over by different locators
where they have been abandoned. The nmnber must
rim into 75,000 or more. That is just a pnre ^ess. I
do not know how many of those are in Eldorado
County, nor in Placer County. Neither county is in
my district. My district is from Mendocino down to
San Luis Obispo and San Joaquin County and
Mariposa. I do not have anything to do with this
district aromid Placerville and Auburn and George-
town.

Redirect Examination
(By Mr. McWilliams)

Q. In your experience over the years, will you
state how many gravel mines you have run across
or become familiar with that run as high in gold as
.56 ounces per cubic yard?

Mr. Coughlin: I object to that. I do not see the
relevancy of it.

The Court: Overruled.

Mr. Coughlin : Exception.

A. I don't recall any.

(Exception No. 15.) [82]

United States of America 107

The next witness called for the Government was
JOHN BONGARD,
who testified under oath as follows:

Direct Examination
\
I (By Mr. Mc Williams)

I am high grade inspector of the State Division of
I Mines. I have held that position for ten years. I
j have charge of the issuance of all of the licenses to
I gold buyers and the investigation of general high
! grade conditions. Highgrading is ore stolen from
i various mines. T know the defendant in this case,
i Mr. Bost; I first met him some eight or nine years
I ago in Nevada City. The first time I met him with
I reference to this case was after he was arrested
I. sometime after the 1st of October, 1936, in Nevada
I City. Mr. Rich was with me, and we asked per-
mission of Mr. Bost to inspect his plant on Broad
street, or his office. I had had connection with the
case in the way of investigation prior to that visit.
In August, 1936, in company with Mr. Rich I made
a trip from Placerville to Georgetown, from George-
town to Volcauoville, down to the Goggins Mine, up
to French Meadows, around to Salt Flat and back
I down to Forest Hill; the distance covered on that
I day ^vas about 90 miles, and en route we stopped at

: the various little towns and made inquiries in refer-

i

I ence to Cougar Canon, the Liicky Gravel claim, and
; also asked various ones if they knew a man by the
I name of Hans Hensen, G. A. Swissler, and Larry
I Larsen. We did not go beyond French Meadows ;

108 BenA.Bostvs.

(Testimony of John Bongard.)

there was no road in there ; we were driving on that
particular daj^; we went out to French Meadows,
and from there the road goes through »Salt Flat,
back down to Forest Hill. We did not get 40 miles
beyond Georgetown. I would say we got about 20
miles north of Georgeto\Mi. Then we stopj)ed at the
ranger station at French Meadows and made in-
quiry, and met a couple of cowboys along there [83]
herding cattle, and made inquiries in regard to
Cougar Canon., the Lucky Gravel mine, and the in-
dividuals mentioned before, but were imable to lo-
cate them. We examined the records of the Coimty
Recorder's Office and County Assessor's Office for
the Lucky Gravel Mine, and also for the names of
Mr. Bost, Mr. Swissler, Mr. Larsen and Mr. Hensen,
both at Placerville, which is the County Seat of
Eldorado County, and Auburn, the County Seat of
Placer County. We foimd no record either of the
mine or the men mentioned. We then came dowTi to
Forest Hill and we made inquiry there from the
Forest Ranger, and also at Georgetown we made in-
quiry from the Deputy Sheriff, and from some of
the old-timers around that section of the country, as
to whether they knew anything of Cougar Canon,
the mine, or the individuals, and we found no one
in Georgetown that knew anything about the mine
or the individuals, but at Forest Hill Ave ran across
a man by the name of Bisbee, who thought he knew
where Cougar Canon was located. We thought it
was in the vicinity of Duncan or Long Canon. Mr.

United States of America 109

(Testimony of John Bongard.)

Rich made an appointment with Bisbee at a later
date to take him to Congar Canon, I mean to Dim-
can or Long Canon, in search for this Congar
Canon, which he thought was there. I did not go
with him on the trip. As time went on, we were on
this investigation for six or eight months, not on
this particular one, but on various investigations,
and occasionally we would go back to that region
on the southerly end of the county, and through
there, and we made inquiry from time to time if
anyone knew or heard of Cougar Canon, without
any success. We were gone two days on that first
trip north of Georgetown. Around the 1st of Octo-
ber, 1936, shortly after Mr. Bost was arrested, we
met him and asked his permission to visit his office ;
we went into the office, and in the front part of the
office there was a desk, and I believe a cot in there,
a big gold scales, [84] and the back of the office was
equipped with crushers and an about four- foot
grinding pan and retort, and I believe a melting
pot. We asked him questions and he said, *'I will
tell that to the Court, to the Judge."

Cross Examination
(By Mr. Coughlin)

We talked to Mr. Bost around the 1st of October,
I believe, shortly after he was arrested, 1936. We
met Mr. Bost coming out of the post office. We said
Mr. Rich and I would like to look at his office, and
he told us he had no objection. We had been, up

110 Ben A. Bost vs.

(Testimony of John Bongard.)

there at that time and made a search fov the Lucky
Gravel chxim. We did not discuss that with Mr.
Bost. We asked him a question with regard to it,
and he said, ''I will tell it to the Court or the
Judge," and we droi)ped it. We had no conversation
with him save and except the conversation relative
to the request to view his place. When we got there
and asked the question he said he would tell it to
the judge, and we dropped it. On this trip we went
past the Goggins Mine. It is located on the Eldorado
County side on the road going up there. I think it
is in Long Canon. I think the road goes up the hill
from the Goggins Mine and you have to go down
to the Goggins Mine. In going to the Goggins Mine
I believe we had to cross the Rubicon River. There
are a number of canons that rim down ; that is a big
country in there. I believe it was two cowboys that
we met. That is all the cowboys we saw^ I don't re-
member that we talked to any miners. We talked to
quite a number of j)eople in Forest Hill; we talked
to a man named Bisbee and another man that
camped around there where we stopped, and several
other individuals around there. The Forest Ranger
we talked to has been a witness. We did not bring
Mr. Bisbee. Mr. Rich and Mr. Lynn went with Mr.
J3isbee to make a search for the place that he [85]
thought was Cougar Canon. Mr. Bisbee thought he
knew where Cougar Canon was. Mr. Bisbee was not
brought here as a witness. I knew about him but as
to imparting that information to tho United States

United States of America 111

(Testimony of John Bongard.)

Attorney, Mr. Rich handled that. I did not talk to
Mr. Raines. Mr. Rich talked to him over the 'phone.
We brought the man where lie stopped, he was one
of the witnesses. I don't remember who else we
talked to at Forest Hill. Mr. Rich took the names
of the individuals ; we were both together and inter-
viewed them. We were investigating tw^o days; the
entire trip covered two days. We did not go back
to that particular part on this particular case. We
were there on other business, and if the case came
up we would ask if they knew^ where Cougar Canon
was, or ever heard of it. The persons whom we
talked to who told us that they did not know of or
never heard of Cougar Canon, the oldtimers, we
brought them here as witnesses. We didn't bring all
the persons we discussed the location of Cougar
Canon or the Lucky Gravel Mine. There were a lot
more that we talked to. We did not subpoena all
the witnesses. Some of them that were subpoenaed
could not get out, as I understand it, they wxre
snowed in. I have no record of those who could not
get out, I just heard of it. I believe Mr. Mc Williams
has that record. We examined the records at Placer-
ville and Auburn. We did not ask for the number
of mining claims that were recorded, we asked
whether there w as a claim under the name of Lucky
Gravel claim, or any record in the name of Ben A.
Bost. We did not look at the records, w^e went to the
County Recorder and were right there when he
looked them up, we stood right there with him when

112 BenA.Bostvs.

(Testimony of John Bongard.)

he looked them up. I did not accompany the re-
corder when he went to look at the records or the
index of the claims. We did not make any effort to
determine whether or not there could have been a
claim known as the Lucky [86] Gravel claim
recorded under another name. Tt would be impos-
sible to do that.

Redirect Examination
(By Mr. McWilliams.)

On that first trip or on our subsequent trips, over
a period of a couple of months, I would say that we
talked to anywhere from 30 to 40 people. No one
other than Bisbee had any knowledge or informa-
tion with regard to any of these names. I did not
talk to Mr. Raines. T have had experience in min-
ing. I have been ^\^th the Mining Department ten
years. I have examined the five affidavits that have
been offered in evidence and noticed therein the
number of cubic yards from which the gold referred
to therein had been taken. I made a computation
from six affidavits submitted by Mr. Bost. I used
the total yardage on the six affidavits and the total
gold on these six affidavits ran .56 of an ounce per
yard. From my knowledge of gravel mines in the
state it is a valuable mining claim. I have heard of
soime gravel claims more valuable than that, but I
have never run across them. In recent years I have
not heard of many that run that high. In years gone
by I read reports and heard rumors of claims that

United States of America 113

(Testimony of A. M. Holmes.)

ran much higher than that. By *' recent years" I
mean the last ten or twenty years; none in the last
ten years.

(Thereupon the Government rested.)

Thereupon the following took place :

Mr. Coughlin : At this time, if your Honor please,
I desire to move the Court that the Court instruct
the jury at this time to return a verdict of not guilty
on the ground that the evidence is insufficient to sus-
tain any verdict save and except a verdict of not
guilty. [87]

The Court: Denied.

Mr. Coughlin: Exception.

(Exception No. 16.)

The first witness called for the Defense was
A. M. HOLMES,

who testified under oath as follows:

Direct Examination.
(By Mr. Coughlin)

I live half way between Nevada City and Grass
Valley. I have lived in Nevada County approxi-
mately forty years. I am in the funeral business. I
have known Mr. Bost for a great many years, and
know other persons who know him in that com-
munity. I know his general reputation for truth and
veracity in which he lives, and it is good.

114 Ben A. Bost vs.

(Testimony of A. M. Holmes.)

Cross-Examination.
(By Mr. Mc Williams)

I have known Mr. Bost since I was a small boy,
about forty yeai's, since I have been there.

Q. Did you know that in the year 1931 lie en-
deavored to get his gold buyer's license, required
under the State law, renewed, and that as a result
of the protests and the testimony that was given
of irregularities in his method of conducting busi-
ness that his application was denied?

-Mr. Coughlin: To which we object on the ground
it is not proper cross-examination, and assuming
a fact not in evidence.

The Court: Ovemiled.

Mr. Coughlin: Exception.

(Exception No. 17.)

Mr. Mc Williams: Q. Did you ever hear thati
A. No, I am not familiar with that.
I am not familiar with what are called production
reports that are required to be given by the pro-
ducers of natural gold [88] and turned over to the
sellers. 1 never heard that Mr. Gus Sweeney had
charged that at the request of Mr. Bost he made
out production tickets in blank and that over a
period of approximately a year and a half he had
turned in or sold gold to Mr. Bost as being of $350
in value and that these production tickets signed
in blank by him had been filled in by Mr. Bost to
show the production of gold by Bost in the amount

United States of America 1 1 5

(Testimony of A. M. Holmes.)

of $3600. I did not know that Mr. Gus Sweeney
gave sworn testimony to the same effect. I did not
know that Mr. Simpkins, of the Empire Star Min-
ing Company filed a protest with Mr. Walter Brad-
ley, State Mineralogist, against the issuance of a
gold buyer's license to Mr. Bost as a result of the
testimony given at that hearing. I never heard that
Mr. Nobs, of the Empire Star Mining Company also
at the same time had filed a protest against the issu-
ance of a gold buyer's license to Mr. Bost by reason
of the evidence presented during that hearing. I did
not know that another protest had been made
against the issuance of a buyer's license to Mr. Bost
by the consulting engineer of the Empire Star Min-
ing Company. I did not ever hear that Mr. H. N.
Maxfield, of the Sixteen-to-One Mine had also filed
a similar protest. I never heard that Mr. Bost had
been accused of buying stolen gold from the Argo-
naut Mine in this State.

The next witness called for the Defense was
C. W. CHAPMAN,
who testified under oath as follows:

Direct Examination.
(By Mr. Coughlin)

I am a chemist and am engaged in the practice
of that profession at this date. I have been prac-

116 Ben A. Bost vs.

(Testimony of C. W. Chapman.)
ticing since 1888. I know Mr, Bost, the defendant
here. I know other persons who [89] know him. I
think 1 know Mr. Bost's general reputation for
truth, honesty and veracity in the community in
which he resides. It is good.

Cross-Exammation.
(By Mr. McWilliams)

I never heard that in 1932, when he asked to have
liis gold buyer's license renewed that as a result of
protests that were put in • and swoni testimony in
regard to his method of doing business that that
application was denied. I know nothing of that. I
never heard when he again attempted two years
later to get a gold buyer's license that similar pro-
tests were put in and as a result of those protests
he withdrew his application. I heard the other
questions that were put to the prior witness in
regard to the sworn testimony that was given by
Mr. Sweeney, as to his having filled in buyer's
reports, and to me all of that is strange. I never
heard of it until today here. I never heard of his
having been charged with having purchased stolen
gold from the Argonaut Mine.

United States of America 117

The next witness for the Defense was
C. S. ARBOGAST,
who testified under oath as follows:

Direct Examination.
(By Mr. Coughlin.)

I live in Nevada City. I have been living there
since 1875. I know Mr. Bost. At the present time
I am one of the supervisors of Nevada Coimty.
I also have a wood business. I have been a member
of the Board of Supervisors five years in January.
I know other persons who know Mr. Bost. As to the
general reputation of Mr. Bost for truth, honesty
and veracity in that community, I would say it was

' good. [90]

Cross-Examination.
(By Mr. Mc Williams)

I never heard as a result of his methods employed
in connection with filling in buyer's reports, pro-

j duction reports of gold that his application for a

I gold buyer's license was denied. I never heard that
subsequently, when he renewed that application a
couple of years later that as a result of protests
that were put in he withdrew his application. I
never heard that he had been charged with pur-

! chasing gold stolen from the Argonaut Mine.

I Redirect Examination.

(By Mr. Coughlin)

As a matter of fact, I do not know w^hether he
I was ever charged with purchasing any gold stolen
I from the Argonaut Mine or any other mine. I have
Ibeen there sixty-two years.

118 BeuA.Bostvs.

The next witness called for the Defense was
J. ZANNOCO,

wOio testified under oath as follows:

Direct Examination.
(By Mr. Conghlin)

I live in Nevada City. I have been living there
since 1894. I am in the wood and timber business.
I know Mr. Bost and know other people there that
know him. I know his general reputation for truth,
honesty and vei'acity. It is very good.

Cross-Examination.
(By Mr. Mc Williams)

I heard the questions put to the other witnesses.
I never heard of any of those matters that were
mentioned.

Redirect Examination.
(By Mr. Cough lin)

I never heard of him being arrested until the
time he was [91] arrested in this case.

Th(^ next witness called for the Defendant was
BEN A. BOST,
who testihed under oath as follows:

Direct Examination.
(By Mr. Coughlin)

1 live in Nevada City, California. I have lived
there ever since I was born, which will be 72 years

United States of America 1 1 9

(Testimony of Ben A. Bost.)

tomorrow. Since 1907 until March, 1934, when my
'health failed me, I was running a general assay
'office in Nevada City. My work consisted of assaying
ifor gold, silver, lead and copper, and to make
j amalgamation tests of quartz to see what it would
igo for sump. I had a nervous breakdowTi in March,
11934. I have been in Nevada City all of my life
except eight months in 1886, when I was in business
in Trinity County, in Deadwood. I remained there
about eight months. I started in the chlorination
business there, and then I went out prospecting
jwith a man named Mr. Swissler. That is the same
Mr. Swissler that has been referred to during the
■course of this trial. I ceased the general assay busi-
juess in the year 1934. The building where I con-
I ducted that business belonged to me at that time,
iand all of the implements and tools. I do not still

I own them. During the years 1935 and 1936 I could
igo in and about that place at any time, I had access,

I I had the building practically, but still I did not
own it, my daughter owned it, and still owns it, the
; building and equipment. The equipment is still
there now. At the time Mr. Rich and Mr. Bongard
asked permission to go into my premises, that was
'after my arrest. I did not make any objection,
whatever, to their doing so. As to the grinder that
Mr. Rich has referred to, all assays, to make amal-
gamation tests, have a grinding pan; first you crush
I the rock in a small rock crusher, as they have in
an assay office, and then [92] you put in a grinding

120 BenA.Bostvs.

(Testimony of Ben A. Bost.)

pan about 40 pounds, and put in quicksilver, and
that makes the amalgamation test, and when you
clean that up that is how you get the value per ton
for a ton of ore or a ton of quartz. Mr. Swissler
came to my office there in the spring of 1928 and
said he was prospecting, and that he would like me
to put up $250 to help him go ahead, that he thought
he would strike pay gravel ; that he was in the
gravel district. I advanced him the $250. After that
he came over occasionally with small amoimts of
gold. With reference to the Lucky Gravel mine that
Mr. Swissler discussed with me, I asked Mr. Swiss-
ler, I said, ^'AVhat is the name of the mine?" And
he said, ''I have not got any name for it," and then
I said, ''We will call it the Lucky Gravel," and
he said "All right." I asked him where it was lo-
cated, and he said Cougar Canon, in Eldorado
County. That was at the time that he first came to
my office in 1928. I saw Mr. Swissler after that
time on several occasions. I gave him a few dollars
when he came over, until the latter part of October,
1930, Mr. Swissler came over there and wanted to
get some more money, so I said, "I don't like to
put any more money in unless I see the mine."
"Well," he said, "1 will take you ovef." I said,
"1 do not like to go there," as my wife was ill in
San Francisco with a paralytic stroke and I would
be liable to be called any minute. He said, "Come
on, now, w'e will go over." That was Mr. Swissler.
It was not Mr. Hensen I went over with. I had never

United States of America 121

■ (Testimony of Ben A. Bost.)

seen Mr. Hensen yet at that time. So he had an old
i truck there, and he said he borrowed it from a
I friend of his at Rattlesnake Bar, below Auburn.
\ 1 said, "How are you going over there?" He said,
I *'I have a couple of gentle riding horses," or riding
j ponies, ''and we will go over that w^ay, and we will
I save time and go on a trail"; so I thought a while,
j and at last I said, "All right, I will go," so we got
, down there [93] to Rattlesnake Bridge and these
j gentle riding horses were burros, so I felt like
t backing out then, but I thought 1 would see it
through, anyhow, so v^e started out there. We started
from there at half past six in the evening and got
1 to his mine at 3 :30 in the morning ; I remained over
j night and during the next day I went in the tmmel ;
I he had some gTavel there, and I prospected it and
j stayed there that day, and the following morning
I at half past five he took me up the other w^ay to
I catch the road where it forked to Georgetown; he
I said he thought he could get a car up there, some-
where around there, and it would take me to Au-
burn. So, going on the road, old abandoned road,
there, along came a camper who w^as coming down
' from the mountain, and he asked us where we were
■going, and Mr. Swissler said I wanted to go to
j Nevada City; he said, "I have to go through
lAubuin, I live in Lincoln, I will take you as far
jas Auburn," and I said, "All right," and so I
iwent to Auburn and went home. That was in Octo-
ber, 1930. That is w^hen I first met Mr. Hensen,

122 BenA.Bostvs.

(Testimony of Ben A. Bost.)

who was at th(^ mine when I arrived there. There i
was no one else there besides Mr. Hensen and ^Ir.
Swissler and myself. I did not ever go back to the i
mine. The last time that Mr. Hensen was in Nevada i
City with the returns from the mine he said that
the gravel had all been worked out, the pay gravel,
and they would have to have some more money to
prospect, and told him I did not feel like doing it, I
would like to go over and see the mine, but I wat
too weak then to do it; he said, ''Never mind, when
I come over again if you are able I will take you
over," and I have not seen him since. I have not
seen him or Swissler since. That was September,
1935. That was the last time I received any gold
from them. When I was getting gold the gold would
be brought to me by Mr. Hensen. Mr. Swissler did
not bring any gold over from the mine after this
lease was made, he wasn't in the office after that.
[94] I think Hensen brought gold six times. I think
it was September 12 or 13 was the last time I saw
him. At that time I told him I would like to see
the place again. When I went out there with Swiss-
ler I went in the night time. I did not make any
marks or anything so I could find iny way back in.
I had a guide. I am sure the claim had not been
recorded, because I named the claim, himself, and
he claimed he owned the ground. As it was Swiss-
ler's I did not think it w^as necessary to record it.
I designated myself on the form that was sent to
the Mint by me as the owner because I was the

United States of America 123

(Testimony of Ben A. Bost.)
. owner, I bought the claim. I bought a half interest
■ when I advanced, the $250 in 1928, and the rest of
I it when I paid the other money — when I was over
I there investigating the claim in October, 1930. I
i gave him $245 then. He asked for $250. I did not
i give him $250, because I w^anted $5 to go on; when

I went I had $250 with me.

Cross Examination

(By Mr. Mc Williams)
I had known this Mr. Swissler before he showed

up in October, 1930, since 1886. I had not seen him
I from 1886 until he showed up in 1928 the first time.
I When he showed up the first time he said he had
I a piece of mining property over there and he was
[prospecting it, and he needed some money, and

asked me if I would advance him $250 for a half
I interest in it. I was kind of easy in those days on

those things, so I said, "Sure, I would." I had a
i whole lot more money in those days that I have got

now. I have no idea what my income was during

the year 1928. I don't think I ever had to make any

report those days. I did not make any report in
'those days. My income was such as to permit me to
.advance Mr. Swissler the $250 in a mine that I had
Inever seen. My income at that time was $8 and $9

a day for assaying. At that time Mr. Swissler said
jit was an old abandoned mine and the tunnel there,

was 900 feet in, that it had been worked in early

j[95] days, and he was going in there, and he thought

124 Ben A.Bostvs.

(Testimony of Ben A. Bost.)

he would be able to strike some pay gravel in there;
he had gravel then. He said he owTied the property.
He did not say how he had acquired title to the
property. I never asked the question and he never
said. I did not ask him whether he had bought the
property or not. I don't know whether he had been
one of the original owners. He was a friend of mine
in Trinity when we were boys, and I trusted him.
I had known him in Trinity County eight months.
He was prospecting aroimd in Trinity Coimty, pros-
pecting quartz and gravel; during the intervening
years he was always prospecting. That is all I knew
about him. When I say he came in the spring of
1928 and I turned over the $250 to him, it was cash.
I took a receipt for it. I destroyed the receipt years
ago, I guess. It naturally got destroyed some way,
because I was looking for it when this case came up.
Swissler came over occasionally, however, with bits
of gold. He did not say whether or not anyone
else was interested in the mine at the time he first
showed up. He w^as alone. I could not say when
that was he came over '^^th those small lots of gold,
it is too far back. I have been interested in quite
a few mining ventures in Nevada County before.
I was not interested in any mine in Placer Coimty
at all, or in Eldorado County, except the Lucky
Gravel. My first interest in that was commencing
in 1928. I couldn't say how much were these lots
of gold that Swissler brought in after 1928. I
think one time something in the neighborhood of

United States of America 125

( Testimony of Ben A. Bost.)

40 ounces, if I am not mistaken; outside of that,
the small amoimts, I don't recollect anything about
that at all. I consider a small amoimt an ounce or
two. It was I who suggested the name of the mine.
I asked him about the name of the mine and he said
it was never named, and I called it the Lucky
Gravel. It had gone in 900 feet with no name, in
the early days, that is, no name that he [96] knew
, of. I know I gave him some money later on, but
, how much I cannot recall. I made this trip to the

I mine in the latter part of October, 1930. The reason

I I went over to the mine was he wanted some more
j money in order to send it to his sister, who was
I sick in Pittsburgh, Pennsylvania. I don't know his
I sister's name. His home at the time was over at
j the mine in Eldorado County. I don't know whether
. anybody else was working in the mine at that time
t besides him. I did not ask him. I did not ask him
I how much of a force he had in the mine at that
jtime. I don't think at that time there was anybody

but himself. He said he was working in the mine,
he did not say he had anybody with him. I never
asked him. When he came over in 1930 he wanted
$250. I ^ have no recollection of how many ship-
Iments of gold had been turned in by him up to
jthat time between 1928 and 1930. I never kept any
I record of those things. As to the amounts of gold
jsent over between 1928 and 1930, I got 10 per cent,
'and he kept 20 per cent. That was pursuant to a
verbal arrangement. I don't know how much the

126 Ben A. Bost vs.

(Testimony of Ben A. Bost.)

mine produced between 1928 and 1930. I know I
did not get my $250 back in that period. I have no
recollection on that, at all. I kept no record for the
purpose of determining when my $250 was repaid.
I have no record at all as to whether it was half 1
paid or what percentage was paid up to October,
1930. In regard to this additional money in 1930,
I said that before I concluded to put any more
money in I would like to see the mine. He said, *'I
will take you over." I said, "In that thing you
have there?" That is, an old Ford car." He said,
"I can't take you in this but I can take you to
Rattlesnake there." He said, "I borrowed this from
a friend of mine, there, and I have to change to
riding ponies there, and I will take you over on
this." I said, "On condition you get me back, be-
cause my wife is dangerously ill in San Francisco
with a paralytic stroke, and I am likely to [97] be
called in any minute." My wife at that time was
at the home of my daiighter on Lombard street in
San Francisco. I have forgotten the number. The
name of my daughter was Mrs. Walmsley. Her first
name was Antoinette. Her husband's name is F. S.
Wahnsley. The trouble with the machine was it did
not run very good. According to what he told me
during those months the mine was in Cougar Canon,
Eldorado County. He did not say where in Eldorado
County. I did not ask him. I did not ask him
where Cougar Canon was, and I did not know where
it was. I was interested in it in a way. I believe I

United States of America 127

(Testimony of Ben A. Bost.)

know there is a tremendous difference in the differ-
• ent portions of the mining counties of the State
, with reference to the output of gold, but I never
i asked him in what portion of the county it w^as
; located. I acquired my first active interest in the
t mine in 1928. As to evidence of ownership, I had
; simply a bill of sale, a receipt. I believe it must
have been destroyed, I can't find it. Anyway, I
bought a half interest at that time in the mine. He
was to work it and I had ten per cent. I had a half
interest and I was only to get 10 per cent. He was
I to pay the expenses incident to operation. That was
I uhderstood. In making the trips from the mine
jdown with these lots of gold he turned in I guess
I he came down on his uin-ros. I don't know. I never
[ asked him how he came down and had no idea. I
[started at half past six in the evening right below
Rattlesnake Bridge, and went up the American
i River, east, I guess it is. The river is east and
I west. I guess we went east. We followed the Amer-
ican River up, the Middle Fork, to opposite Ken-
nedy Hill. 1 don't know how far that was from
where we started; it must have been somewheres
between 30 and 40 miles. Burros don't travel very
fast, probably about four miles an hour. After we
:got to Kennedy Hill we turned to the right and
proceeded probably five or six miles, something like
(that. We [98] were following a trail and after
ituming off those four or five miles we came to the
!mine, in the neighborhood of four or five miles off

128 BenA.Bostvs.

(Testimony of Ben A. Bost.)

tlie American River. I saw no road to this mine.
Swissler said there was no road there. We got there
at half past three in the morning, I had something
to eat and went to sleep, and after I got up I went
through the tunnel. It was in about close to a thou-
sand feet. I went in to the end. I would say a
thousand feet is about right. There was evidence
of recent work. He had done a hundred and some
odd feet of new work. At the time I came to this
tunnel at that time this man Hensen was there. I
had a casual conversation with him, such as "Hello."
Hensen did not have any interest in the property
so far as I was aware of ar that time. He was
employed as a day laborer. I don't know how much
he was paid; that is between him and Swissler. I
had nothing to do with it. I was not interested in
it. I judge the size of the tunnel was something
like 5 or 7 feet, the average size tunnel ; it is about
the average size tunnel they run on gravel proper-
ties. I got up about seven or eight o'clock in the
morning, I guess, had breakfast, and examined the
tunnel. It took me about two hours to examine it.
I panned some of the gravel there. I tried three or
four of them there and then of the whole part of
the gravel, and I took one from the bottom. I don't
think it was over three pans I took. To make a test
of the pan, to make a good job so that you don't
lose anything, it takes all of a half hour to make
a test. I simply j)ut the gravel into the pan with
some water and washed out the pan until you have

I United States of America 129

' (Testimony of Ben A. Bost.)

the residue of gold. It takes a half hour if you want

I to be careful not to lose anything. At the teraiina-

1 tion of that panning I took a rest, I was tired. I

i rested all that afternoon and tliat night until about

j four o'clock the next morning, and then got up and

i had breakfast and he took me up toward George-

; town, to [99] catch the road. I left the mine at

\ half past five and got to Auburn at half past one.

The mouth of the tunnel was timbered. The rest

i was going through lava. It was not necessary to

I timber. It goes through lava before you strike the

gravel. It went about 800 feet before striking the

gravel. At the time I was there there was about a

hundred feet of gravel. There w^as a tent at the

mine, and a small creek. That is what thev call

1 '

i Cougar Canon. This was Cougar Canon the water
I was in, a creek — a canon or gulch, whatever you
[might call it, I don't know. It was about a two-inch
I stream. It is very valuable up in that country, but
1 it had no name that I know of. I did not make any
' inquiry relative to water rights, no investigation. I

knew nothing about whether those water rights were

all taken up. The next time I saw Swissler was
i the day the lease was signed, in January, 1932, I
! think ; something like that. Prior to the time the

lease was signed, and after October, 1930, I did not
isee Swissler at all. Between October, 1930 and
1 January, 1932 he actually came in with s mall
[amounts of gold. Between 1928 and 1930 he came

in also. Swissler came in with them before the

130 Ben A. Bost vs.

(Testimony of Bon A. Bost.)

lease was signed. Between October, 1930 and Jan-
uary of 1932 he came in sometimes two or three
months or more; it averaged probably four or five
times a year. I could not say how much gold he
would bring in on those trips. Although I was
getting 10 per cent. T have no idea how much gold
as to amount he would bring in. As I said before,
one trip I think he brought in some 40 ounces odd.
That is the only one that I recollect. I don't know
when that was, I could not say. I think it was after
I visited the mine in October, 1930: I couldn't say
how long after. I did not keep any record of these
transactions. I kept records of all of their assay-
ing but I never took any record of this. T have no
idea as to how much was brought in other than the
40- [100] ounce item by Swissler after October,
1930. I had to keep records of my assaying trans-
actions because sometimes people that you are assay- ,
ing for would want a duplicate copy. He brought f
in from 2 ounces to 40 ounces over a period of sev-
eral years and I kept no record, whatever. At that
time I think I shipped this gold he brought in to
Selby's. I am pretty sure I did, through the Ne-
vada County Bank. In those days they shipped for
me, excepting toward the last. Then T shipped,
myself. By "the last" I mean from 1932 on, I
shipped, myself. I shipped, myself, too, when I
had the gold buyer's license. I think that was in
1929 or 1930. When I made the trip up to the mine
in October, 1930 I had an anticipation that I was

United States of America 131

(Testimony of Ben A. Bost.)

going to invest more money in it. I had a talk with

Swissler in regard to how much he wanted for the

balance ; he wanted $250. He told me that before I

started, in the assay office, there. I couldn't say as

to the approximate amount of gold that had been

I produced by the mine and turned over to me between

j the spring of 1928 and October, 1930. I could not

I say as to that time. I think 1928 and 1929 I had a

i gold buyer's license and it was shipped in that way.

I I am not certain that is the year. I don't recollect

I how much gold Swissler had brought in or sent in

I during that period of over two years. It was in the

I hundreds. As to the lease that was signed in Jan-

' nary, 1932, Mr. Swissler, and Mr. Hensen, and Mr.

I Larsen came to my place and said they wanted to

' take a lease on it, that they wanted to put more

j men to work there, and they wanted the lease so

I that they could give the other people a sublease. I

j do not recollect that there was any gold brought in

I with them at that time. I am not sTire whether

there was any brought in that time or not. If it was

a large amount they brought in I would recall it,

anything over 20 oimces. Gold at that time was

I $20.67 an ounce, and in 1934 it went up to $35 an

I ounce. When I sent gold to the Mint I was paid on

i those [101] rates. There was not over 20 ounces at

I the most, if there was that much brought in, unless

I that is the date the 40-odd ounces was brought in.
' I think the 40 odd oimces was the largest shipment

I I ever received. 20 or 30 ounces of gold woidd not

132 Ben A. Bost vs.

(Testimony of Ben A. Bost.)

amount to much to me. It would be $3 or $4; that
is all I would get off the 10 per cent. The other
parties had an interest in it. If any shipment was
brought in at the time the lease was entered into it
wasn't a shipment in excess of around 20 ounces.
I wouldn't say I would remember distinctly if there
were any shipments in excess of that. I have no
recollection. I don't remember a shipment that
realized over $1000 at that time. There was not
any conversation with -^j^^ard to the tenns outside
of what was set forth in the lease. I w^as to get 10
per cent, of all gross receipts from my iuA^estment,
which amounted to in the neighborhood of $500,
probably more. It was probably some more than
that but that is approximately. When I went up on
the visit to the mine Swissler had fixed his price
at $250, and I brought $250 with me. I did not
bring enough to pay my expenses coming back, if
there were any, because he agreed to bring me back.
I don't know why he did not bring me back. He
started out to bring me back but only went part
ways. He did not give any reason for abandoning
me there on the way home. He would have seen me
home if I hadn't ran across the party coming down.
There was no reason to give any reason for not
coming back with me. Mr. Hensen was at the mine.
They had a tent over at the mine. Apart from his
tent at the mine I don't know where his home was.
I saw Hensen after that when he brought the ship-
ments in. I think there were six shipments alto-

United States of America 133

(Testimon.y of Ben A. Bost.)

getlier. I don 't recollect how many shipments Swiss-
ler brought in before or after the lease was signed.
I have no recollection of whether it was a substan-
tial amount, or not. I don't even remember that
[102] January, 1932 shipment. Hensen brought in
six shipments after that. The approximate size of
all of the Hensen shipments was somewhere from
80 some odd to 120 something. I don't know the
exact figures. The first shipment by Hensen was
sometime in January, 1934. Hensen did not bring
any gold in 1932. I am referring to those shipments
on those affidavits. Swissler brought in the gold
after the lease was signed; I don't know how many
shipments. I haven't any recollection at all. I don't
I remember. I have no recollection as to the approxi-
mate niunber that he brought in ; I have no approxi-
; mate recollections as to the size of the shipments
j that he brought in. I was interested in getting my 10
j per cent. I don't know what my 10 per cent.
I amounted to on those shipments. I made no record,
no entry of any kind. He did not accompany the
i shipments by any statement showing the output of
the mine, nothing of that kind; Hensen did not do
so at any time. I never asked for anything of that
I kind. I haven't seen Hensen since the last shipment
i that he brought in. I inquired in regard to him
' around Nevada City if they knew a fellow coming
: in there named Hensen, and nobody knew him. I
I hadn't seen Swissler since his last shipment. I don't
.remember the last time I saw him. It must have

134 BenA.Bostvs.

(Testimony of Ben A. Bost.)

been the date of the last shipment that lie bronglit
in. I have not seen Larsen anywhere after the
lease was signed. I did not have any correspond-
ence with any of those three men who signed the
lease. I never wrote to any of them or received any
letter from them. Those three were signing up for
a gronp of seven — they were going to sublease to
the other parties. T don't know wdio the parties to
whom they were going to sub-lease were. I liad no
interest in the type of the sub-lessors of my prop-
ert}^ I had a 10 per cent, interest, but I had no
reason to be interested in whom they subleased to,
nor whether they were capable miners or fin- [103]
ancially responsible. It was certainly of interest to
me if they embezzled all of the proceeds of the mine.
I took it for granted those lessors were honest men.
The lessors who signed up with me were going to
sublet to those others; they would be responsible
for the output. I did not have anything in v\riting
to that effect. At the time I entered into the original
lease they said they were going to have more men
there and they w^ere going to [)ay wages or leases.
They said they were going to sublet, but I knew
nothing in regard to the financial standing or char-
acter or integrity of those proposed sub-lessors. As
far as I know I o^vn that mining claim still. I did
not ever locate it. When I say I ova\ it, I mean I
bought it from Swissler. 1 paid $500 or $495 for
it. Swissler said he owned the ground the claim was
on. I never looked up the records to see whether

United States of America 135

(Testimony of Ben A. Bost.)

he did or not. I never made any inquiry by writing
to the County Recorder or the County Assessor to
see whether Swassler appeared on the records as
owning the property, nothing of that kind. I had
not seen him since the year 1886 and then I knew
him for eight months. I wrote this lease, Exhibit 4,
myself. I wrote it on the typewi'iter. Wlien Hansen
brought in half a dozen shipments to Nevada City,
and when he would bring in those shipments he
would stay several days, but not over that. I did
not see him during those visits of a couple of days
at all, because I was sick. March 4, 1934, I think
it was that I had a nervous breakdown. Hensen was
bringing in the shipments in 1934 and 1935. Swissler
brought them in all the time from 1928 to 1934, I
think, about six years. When he came in he would
go right back; he would stop sometimes in Grass
Valley, m a hotel, I suppose, or a boarding house.
I do not know where he stayed. I did not during
the period of six years when this business associate
of mine was coming in [104] every now and then
ever learn w^here he was stopping. He stoj)ped with
some friend in Grass Valley, but I do not know
who he was. I w^as not imable to see him in 1934
and 1935, but to get around with him. I saw^ him
at my home. He called at my house. T did not
carry on my business during 1934 and 1935 except
: making those shipments from the Lucky Gravel
I mine. I closed my assaying business in 1934, at the
I time of my nervous breakdown and did not resume

136 Ben A.Bostvs.

(Testimony of Ben A. Bost.)

it thereafter. The only business I had from 1934
was making the Lucky Gravel shipments ; as to the
form, some call it retort and others call it sponge.
The 'vlint calls it amalgam kings. It was gold, it
wasn't concentrates. I got no concentrates at any
time. I shipped the gold that I got in that form
during that period of time to the Mint. As late as
February, 1936 I think I sent 181 sacks of concen-
trates to the American Smelting & Refining Com-
pany of San Francisco. I shipped some, but do not
know how much. I had accumulated the sacks in
the assaying office. If anybody wanted to work any
quartz or anything I would merely give them the
key. When I said I was not transacting business,
myself, I mean I wasn't in the office. It was this
place the concentrates were usually sent in. I would
turn over the key to anybody that wanted access to
my plant, letting them put shipments in there. I
don't know Avhere those shipments were coming
from. I did not keep any record of it. I do not
think the law required me to keep a record of the
source of concentrates that wTre received by me at
that time, because if it did I never heard of it. I
was not buying the concentrates that were being
brought in ; those concentrates were left there for
I)aying for the w^ork of the office, work they wei'c
doing. They w^ere reducing this rock in the office
they had, lots of people, j)rospectors around. I did
not keep any record of w^ho they are. They simply
asked for the key and to use the plant. I gave the

United States of America 137

(Testimony of Ben A. Bost.)

key to anybody who came along. The concentrates
[105] that were turned in were mine. I did not keep
any record of where they came from, because I did
not think it was necessary. To my knowledge, I
did not consider that the law required you to keep
such a record. I am not familiar with the mining
law. My last mining license authorizing me to buy
gold expired December 31, 1931. I have not had a
license after that. I shipped the concentrates after
they came in by freight. I handled those transac-
tions. They went out of the plant to the Selby Plant
by truck. I did not load them, myself. The ones
that hauled them loaded them. I have got home a
record from the Selby Company of those concen-
trates that were sent down. I haven't it here. I

I think the w^hole shipment was 281 sacks, if I am

I correct.

Q.I have a letter here wliich I think may refresh

I your recollection on that subject. In fact, two

I letters.

j Mr. Coughlin : May I see it, Mr. Mc Williams ?
Mr. Mc Williams: Certainly. (Handing paper to
Mr. Coughlin).

' Q. I will show you these two letters, dated Feb-

! ruary 7, 1936, and ask you if that refreshes your

} recollection as to the shipment that you have been

1 referring to.

Mr. Coughlin: We object to this, your Honor, on
the ground it is not proper cross examination. There

138 BfuA.Bostvs.

(Testimony of Ben A. Bost.)

was no examination whatsoever on his direct along

this line, an examiantion relative to his concentrates.

The Court : Objection overuled.

The Witness: A. That is correct. 281 sacks
shipped, two or three days

Mr. Mc Williams: (Interrupting) Q. 155 plus
145 makes 288?

A. 281, isn't it? Maybe it's 88.

Q. As I figure it, that is 300, is it not ? Does that
refi-esh your recollection? Take another look. If that
was the amount.

A. I guess that is right as far as the shipment
comes, but they [106] only received 281 sacks.

Q. It does now refresh your recollection?

A. They were sent out from my home.

Q. You mean your place of business ?

A. Yes.

Q. And they were concentrates that had accu-
mulated in your office, and you now recall, having
refreshed your recollection, that they had accumu-
lated over what period of time, would you say?

A. Oh, I think it was a year and a half or more.

Q. February, 1936?

A. Something like that.

Q. Back from the middle of February, 1934, is
that right?

A. I guess so.

Q. Ai\d you I'ecall now that your memory is re-
freshed, that had actually accumulated over that
period of time?

United States of America 139

(Testimony of Ben A. Bost.)

A. That is what I shipped — but didn't arrive;
that is what accumulated.

Q. You recall that now clearly, do you?

A. Yes.

Q. Is it not a fact that in addition to this 300,
that you had shipped almost twice that many?

A. When?

Q. During that period of time. Between the time
of your breakdown and 1936.

A. Not that I know of.

Q. Not that you know of ?

A. No.

Q. You recall it was only this 300?

A. That is all.

Q. I also show you another letter. See if that
refreshes your recollection on that subject.

Mr. Coughlin: That is objected to as incompe-
tent, irrelevant and immaterial, and as having no.
bearing on the issues of the case, and not proper
cross examination.

The Witness : This refers to that shipment.

Mr. Mc Williams: Q. It does?

A. Yes.

Q. Are you sure about that?

A. Certainly.

Mr. Mc Williams : I offer the three letters in evi-
dence, your Honor, and ask they be marked as one
exhibit. [107]

Mr. Coughlin: I object as incompetent, irrele-
vant, and immaterial, and not tending to prove any

140 Ben A.Bostvs.

(Testimony of Ben A. Bost.)

of the issues in this case, and not proper cross

examination.

The Court: Overruled.

(The letters were marked '^U. S. Exhibit 6.")
Mr. Mc Williams: I would like to read these let-
ters into the record.

(Mr. McWiliams reads Government's Exhibit 6.)
I was visited, as I recall it, by Mr. Hensen on the
12th or 13th of September, 1935. He wanted more
money to carry on. The production during the year
1934 1 think was somewhei'e in the neighborhood
of $9000. In 1933 it was little or nothing. I do
not know what it was during 1932, I can't say, I
have no recollection, at all. I got 10 per cent, through-
out the year 1932. I can say what I got was under
$400. I could not say what it was. It was a small
amount, that is sure. I don't remember what it was
in 1935, but I know it is in the neighborhood of
$9000. I haven't the least idea of the total amount
of gold taken out of that gravel mine. I know that
in 1935 $9000 was taken out of the mine on the
shipment to the Mint reports. I have no record,
whatsoever, of it. You remember, I have been
pretty sick. When Mr. Hansen came in and told me
that the gravel mine had worked out the last prior
shipment that I had received prior to that informa-
tion from him, I don't know whether it was April,
May or June. One of those months, I could not say.
I don't remember the amomit. It was in the neigh-
borhood of $3000. Mr. Hansen said, in regard to

United States of America 141

(Testimony of Ben A. Bost.)

the mine being worked out when it showed $3000 in
September, that was the last clean-up. There wasn't
any more pay gTavel. As to why they wanted more
money, I having given them $9000, they claimed
that the gravel was taken out above the water level
and they would [108] have to run another tunnel, so
I asked them to take me over there and I would
look the mine over as soon as I was able, and he
said he would be back again and take me over, and
I have never seen him since. At the time I w^as over
there the mine was all right. I knew the general
character and type of mine inside. I had this experi-
ence with my associates running there over a period
of four years, and had foimd them presmnably com-
i patent, and trustworthy and reliable, I thought they
were. When they said more money was necessary
I will tell you the reason why I did not take their
word for it. I was in bad health, and getting old,
and I thought if they wanted any more money,
I did not have the money, myself, I would
have to go out amongst my friends and
raise it, that I would like to see what was
over there first. I have been in the mining game
all of my life, and the other men were also, as far
las I was aware, and they had been operating the
imine, themselves, and had first-hand knowledge
of the conditions. That took $1500. They didn't
know how long the tumiel would be. They thought
jit would have to be longer than the old tunnel, to
get down lower in the gulch. They were going to
build an entirely new tiurmel, they were telling me.
The tunnel went through lava about 800 or 900

142 Boi A.Bostvs.

('I'cstimony of Bon A. Bost.)

feet, and yon drive it throngli lava by blasting the
gronnd with drills and powder. They didn't drive
the old tunnel. As to how long it would take a prac-
tical mining man to drive that, it depends on how
many men there were in there. I could not tell how
many men worked on that timiiel. There couldn't
be more than three work on a shift. They could
work three shifts. I didn't stop to tigure how long
it took to drive that tunnel, having a full crew of
competent men. It would take several years, I
should judge. The men could live in tents. They
had a tent there. I did not see any evidence of an
attempt to de- [109] velop a mine — whether sheds,
or shanties, or how it was. I did not see any at all.
They put new timber in the mouth of the tumiel.
I do not laiow how far that gravel extended in the
tminel. The timnel is supposed to run through that
ridge. I don't know how deep it was, or the width.
Once in a while they had to timber that part where
they struck the river bed. I do not know whether
they could drive the tunnel along there instead of
starting a new tunnel. It would have been prac-
tical. I do not think you could drive a tunnel
through 800 feet of lava rock for $15(X). They did
not say whether that would be sufficient for the
purpose. That is what they wanted put up. As to
how that $1500 was to be expended, they wanted me
to pay them wages, part of that was for supplies
and wages and tools and everything necessary tc
mine with. They wanted me to pay the full $1500
and said that it would finance this additional work.

United States of America 143

(Testimony of Ben A. Bost.)

They didn't give any reason for suggesting that I
put up the full $1500. I called their attention to
tlie fact that during that year they had undoubtedly
received 90 per cent, of over $9000, and they said
they earned it; they didn't make more than wages
for seven men. I never mentioned anything with
regard to the fact that in the prior year they had
made almost $9000. I knew at that time how much
the prior year's profits were. That wasn't discussed
at all. I called their attention to the fact that the
lease was to rim five years, and that it wasn't up,
at that time. They said that didn't make any dif-
ference about the lease. If they had to run a new
timnel over there they wanted to be paid for it. T
did not succeed in locating Swissler any place, I
never knew where he was at all. I thought he was
dead. I never saw Larsen before and have never
seen him since. I had his signature and knew his
name. I couldn't locate him any place. I never saw
Hensen since. He promised to come back and take
me to the mine. He said he would [110] be back
soon. I told him that he did need to come back
in a hurry because I did not think I would be able
to get around. I don't think he is coming back
now. When Swissler and Hensen came in with these
lots of gold from time to time they gave me the
, gold and said, ''This is so many oimces," and I
figured it out. That is all they did. They did not
give me a written statement. They told me the
mine was looking good. When they made these

144 Ben A. Bost vs.

(Testimony of Ben A. Bost.)

periodic trips we discussed that they were working
and it looks pretty good, just general statements. I
did not keep any record of those statements.

Redirect Examination
(By Mr. Coughlin)

The last time Hensen was in I said I would like
to go over and see that mine. At no time after that
did I see Hensen, Swissler or Larsen. At the time
I was receiving this gold and at the time I was
shipping it to the United States Mint, I believed,
as the affidavit says and sworn to, the best of my
knowledge and belief, I thought it cam.e from the
Lucky Gravel mine. I remember talking to Mr.
Ijynn in Nevada City. The first tune I talked to
him was somewhere around August of last year. I
had seen Hensen the last time in September the
year before. After I talked to Mr. Lynn I gave
him, at the time I talked to him, a description to
the best of my ability as to how to get there. Mr.
Lymi came back again. He told me that he or the
United States Government had made an investiga-
tion and could fbid no such mine. I did not at any
time prior to the time that I realized that Hensen
and Swissler and Larsen had not returned, and
prior to the time that Mr. Lynn told me that there
was not such mine being operated by those people
over there, suspect Larsen or Swissler or Hensen
during the time Hensen was bringing the gold to
me. At the present time, after Mr. Lynn gave me
[in] all of that report, he had been all through
that country, I had kind of an idea in my mind

United States of America 145

(Testimony of Ben A. Bost.)

that those fellows fooled me over there, or that
they took me to somebody else's mine and showed
me that, or whether they actually did own that
property. I snrely believed at the time I received
gold from them it was coming from that mine or
I would not have made that affidavit to the Mint.
I told Hensen in 1934 to put up a sign there "The
Lucky Gravel Mine," and he promised he would.
Whether he put it up or not, I do not know. I
have some doubts at the present time as to whether
I actually own the mine or not. I believed at the
time I did.

Recross Examination
(By Mr. Mc Williams)

As to when these suspicions of my business asso-
ciates first engendered in my mind, after the last
time Mr. Lynn was telling me that he and — I think
he said Mr. Rich was with him over there, and
they went all through it and could not find anything
on it, maybe there is something wrong. I don't
think just at the time I told him in conversation
with him that his statement made me somewhat sus-
picious in regard to my associations. I began to think
so about a week afterwards when I commenced
thinking things over. I got suspicious in October,
1936. Up to that time I was not at all suspicious in
regard to them or any of them. It did not make
me suspicious of him w^hen he had promised to come
back and take me to the mine and never showed up,
as I did not know when he was coming. He said
the next time he came over. It was in September,
1935 I had this talk with Hensen that he would

146 Ben A. Bost vs.

(Testimony of Ben A. Bost.)

come back and take me. When a year expired and
he did not show up I thought they left the country.
I was not suspicious. I thought that they had merely
quit over there. I did not make any investigation
then to tind out about these men; I did not know
where to look for them. I [112] did not wTite to
the Recorder's Office to tind out whether there were
any records there. I did not write to the Assessor's
Office to fuid out what he knew about them. I went
from Nevada City to Rattlesnake Bridge in an
automobile. Swissler took me down. After he got
there he gave the automobile to the man who
owned it; his name was Horner. That was the
dilapidated car I was telling you about. Coming
back when we left the mine we started out with
jacks or burros. I do not know how far we traveled
with them. It must have been tive or six miles above
Georgetown. I was traveling about an hour and a
half with the burros. I was not traveling on the
same trail I came in. After I had covered this dis-
tance with the burros this camper came down there
from up — I think he come from Josephine, or if
there is a name like that — up there. I did not make
any memorandum of the circumstances of this trip
when they wT.re fresh in my memory, no record at
all. The amount of gold brought to me from the
Lucky Gravel Mine, the amount in these Govern-
ment affidavits, I think is in the neighborhood of
$18,000. There was some gold brought to me from
that mine before that actually went into effect.
I could not recollect the value of that. I do not

United States of America 147

(Testimony of Ben A. Bost.)

think it was as much as $9000. I don't know. Only
Hensen and Swissler brought me the gold from the
mine. When Swissler called upon me with some
omices of gold I would weigh it and figure up,
figure his 90 per cent. I took the gold and weighed
it and figured up what the gold was worth and what
my percentage would be, and w^hat was coming to
him and paid him then and there, or next day in
cash. I had part of the money in my place and the
rest I borrowed from relatives of mine who lived
there part of the time. I paid them in cash for the
entire amount every time. In all of these transac-
tions involving some $18,000 I kept no record of
my own, kept the Mint returns. I had those. [113]

Thereupon the Defense rested.

Thereupon the Government proceeded with its
Rebuttal evidence. The first witness recalled by the
Government in rebuttal was

R. C. LYNN,

who testified as follows :

Mr. Bost said he caught a ride from Nevada City
to Rattlesnake Bridge with a man who was driving
on to Sacramento. I do not recall that he stated
his name. I believe he stated he was a traveling
salesman. He said he went from there down to the
mine on the jacks of Mr. Hensen.

Cross Examination
(By Mr. Coughlin)

I believe he did mention the name of the man he
went with to Rattlesnake Bridge. I am testifying

148 Ben A. Bost vs.

(Testimony of R. C. Lynn.)

as to my recollection in that regard of a conversa-
tion that took place in September over a year ago.

Redirect Examination
(By Mr. McWilliams)

I refreshed my recollection before I went on the
stand from notes that I made immediately after my
conversation with Mr. Bost. Those are the same
notes I turned over to counsel to examine.

Thereupon both sides rested.

Mr. Coughlin : I desire, for the purpose of the
record, at this time to move the Court to instruct
the jury to return a verdict of not guilty on the
ground that there is no evidence — that there is not
sufficient evidence — to sustain any other verdict
save and except a verdict of not guilty. [114]

The Court: I will rule on Mr. Coughlin 's mo-
tion Friday morning.

(An adjournment w^as here taken until Friday,
November 26, 1937 at ten o'clock a. m. at which
time the trial was resumed.)

The Court: The motion to instruct the jury to
return a verdict of not guilty is denied.

Mr. Coughlin: Exception.

(Exception No. 18.)

Thereupon the cause was argued by coimsel for
the Government and by counsel for the defendant,
at the conclusion of which the Court instructed the
jury as follows:

Tin ited States of A mcrica 149

The Court (Orally) : Gentlemen of the Jury, in
this case the defendant is charged in five counts for
violating Section 80, 18 United States Codes An-
notated. The law that he is charged with violating
provides that whoever shall knowingly and wilfully
falsify, or conceal, or cover up, by any trick, scheme
or device, a material fact in any matter within the
jurisdiction of any department or agency of the
United States, shall be pimished in the manner
therein provided by law.

The particular matter that the defendant is
charged with having concealed and covered up has
to do with the alleged purchase by the defendant
of certain gold, and the subsequent sale of that gold
to the United States Mint at San Francisco.

Under the Gold Reserve Act of 1934, United
States Mints are authorized to purchase gold re-
covered from natural deposits in the United States,
which gold has not entered into monetary or in-
dustrial use. For the purpose of carrying this Gold
Reserve Act into effect the Secretary of the Treas-
I ury is authorized to issue appropriate regulations.
I It is provided in the regulations so issued by the
Secretary of the Treasury that in the case of per-
, sons who have purchased such gold directly from
those who [115] have mined or panned it, the Mint
I shall not purchase such gold unless it is accom-
1 panied by a properly executed affidavit, on a certain
I specified form, together with a statement, also un-
j der oath, giving, among other things, the names of
the persons from whom the gold so offered for sale
was purchased.

150 Bc]i A. Bost vs.

It is alleged in the first count in the indictment
in this case that on or abont the 6th day of April,
1936, the defendant, Ben A. Bost, reqnested the
San Francisco Mint, which was at the time an
agency of the Treasury Department of the United
States, to purchase certain gold which was then and
there tendered by said defendant to the Mint for
sale.

It is further alleged that for the purpose of in-
ducing the Mint to purchase said gold it was ac-
companied by an affidavit executed by said defend-
ant, under the terms of which defendant is charged
Avith having wilfully, knowingly and unlaw^fully cer-
tified and sworn to certain material matters which
were not true, and which he did not believe to be
true when he swore to said affidavit, to- wit, that he
was the owner of a mining claim called the T^ucky
Gravel claim, and that the source of said gold so
tendered and deposited was Lucky Gravel claim,
mostly small nuggets, and that said gold had been
recovered from said claim, which claim it was
stated in said affidavit was located in Cougar Canon,
Eldorado Coimty, California, w^hereas in truth and
in fact, as said defendant then and there well knew,
he was not the owner of any mining claim in said
county and State laiown as or called the Lucky
Gravel claim, and whereas, in truth and in fact,
the source of said gold was not said Lucky Gravel I
claim, and said gold had not been recovered from
said claim, which said facts said defendant is
charged at all times to have well known.

Uuifed States of America 151

In the second, third, fourth and fifth counts of
the indict- [116] inent, similar charges are made
against the defendant in connection with the sale
of gold to the Mint, the principal difference in the
subsequent counts being that in those counts dif-
ferent affidavits are alleged to have been presented
by the defendant to the United States Mint at San
Francisco on different dates from the one mentioned
in the first count.

The Gold Reserve Act of 1934 authorized the Sec-
retary of the Treasury to issue regulations for the
purpose of carrying that Act into effect. Such regu-
lations have the force and effect of law. Mere ig-
norance by the defendant of such regulations does
not constitute a defense on a charge of the kind
involved in this action.

Since the language of the indictment includes the
charge that the defendant falsified a material fact,
it is not necessary for the Government to prove
that it was actually deceived by the actions of the
defendant. If you find beyond a reasonable doubt
that the defendant did falsify a material fact in
a matter within the jurisdiction of the Treasury
Department of the Government, you are authorized
to find him guilty.

Under the law of the State of California it is
unlawful for any person to engage in the business
of purchasing or receiving for sale gold nuggets,
ores, or concentrates bearing gold, without first
procuring a license authorizing him to carry on such
business.

152 Bf)} A.Bostvs.

Moreover, under the law of the State of Califor-
nia it is further provided that every person carrying
on such business shall keep and preserve a book in
which shall be entered at the time of the delivery
to him of any gold nuggets, gold-bearing ores or
concentrates, certain information, including the
name or location of the mine or claim from which it
shall be stated that such gold had been mined or
procured, and the name of the party delivering the
same, with the date of delivery. [117]

I further instruct you that although a purchase
or sale of property usually implies the payment of
a price in money, such payment in money is not
essential to a sale. A sale may be for money or its
equivalent, and such equivalent may take the form
of services, or the supplying of accommodations or
equipment.

A material element of the crime charged in the
indictment is the element of intention, the state of
mind, the question whether there was a fraudulent
intention in the mind of the accused. Each and
all of the counts charge the making of a false oath
or a fraudulent concealment. A false oath must be
fraudulently made, the concealment must have been
fraudulently made.

While it is sometimes said a man must be pre-
sumed to intend the natural consequence of his
acts it is never presumed, nor should a jury pre-
sume, that a man had a specific criminal intent.
When a criminal statute requires the presence of a
specific criminal intention, such as a fraudulent
intention, such specific intention must be proved,
not presumed.

United States of America 153

The burden of proving a specific intention rests
upon the prosecutor, and from the beginning to the
end of a trial that must be proved, like any other
fact, beyond a reasonable doubt. This question of
intent, however, like all other questions of fact, is
solely for the jury to determine from the evidence
in the case.

The indictment on file herein is, and is to be con-
sidered as a mere charge or accusation against the
defendant, and is not of itself any evidence of the
defendant's guilt, and no juror in this case should
permit himself to be to any extent influenced against
the defendant because of or on account of such in-
dictment on file.

It is the duty of the jury to decide whether the
defendant is guilty or not guilty of the offense
charged, considering all of the evidence submitted
to you in the case. It is not for you [118] to con-
sider the penalty prescribed for the punishment of
the offense at all. If you are aware of the penalty
prescribed by law it is your duty to disregard that
knowledge. In other words, your sole duty is to
decide whether the defendant is guilty or not guilty
of what he is charged with. The question of punish-
ment is left solely to the court, except as the law cir-
cumscribes its power.

In civil cases, gentlemen, the affirmative of the
issue must be proved, and when the evidence is con-
tradictory the decision must be in accordance with
the preponderance of the evidence; but in criminal
cases guilt must be established beyond a reasonable
doubt, and the burden of establishing such guilt
rests upon the government.

154 Ben A.Bostvs.

The law does not require of the defendant that
he prove himself innocent, but the law requires the
government to prove the defendant guilty in the
manner and form as charged in the indictment, be-
yond a reasonable doubt, and unless the govern-
ment has done so the jury should acquit. Before a
verdict of guilty can be rendered each member of
the jury must be able to say in answer to his in-
dividual conscience, that he has in his mind ar-
rived at a fixed opinion based upon the law and the
evidence in the case, and nothing else, that the de-
fendant is guilty.

You are the exclusive judges of the credibility
of the witnesses w^hose testimony has been admitted j
in evidence herein, and of the effect and value of
such evidence. Your power in this regard, how-
ever, is not arbitrary, but is to be exercised with
legal discretion and in subordination to the rules
of evidence. It is the province of the Court, under
the law, to state to you the rules of law applicable
to the case, and you, in your deliberations, will be
guided by those rules as stated. It is your duty to |
pass upon and decide all questions of fact. [119]

In arriving at a determination as to the credi-
bility of the witnesses who have appeared before
you, you will remember that every witness is pre-
sirnied to speak the truth, but this presumption
may be overcome or repelled by the manner in which
the witness testifies. This presumption may be over-
come by the appearance of the wi^iness upon the
stand, and by the character of his testimony; or if
it is unreasonable or incongruous, or by the giving
of false or perjured testimony by him, or by his

United States of America 155

interest in the case, or by any bias that may have
been displayed, or by any contradictory evidence.

The defendant has offered himself as a witness
in the case. This is his right, and you are to weigh
his testimony in accordance with the rules given
you with respect to the weighing of the testimony
of the other witnesses in the case, with this addi-
tional feature, which is personal to him, you are to
weigh his testimony in the light of the fact that he
is the defendant in the case, and in the light of his
interest in the outcome of the case because of that
fact.

You are not boimd to decide in conformity with
the declarations of any number of witnesses which
do not produce conviction in your minds against a
less number, or against that presumption or other
evidence satisfying your minds.

I further instruct you that the oral admissions of
a party have to be viewed with caution. The law^
presumes a defendant shall be looked upon as in-
nocent until proven guilty beyond a reasonable
doubt. This presimiption remains with the defend-
ant and will avail to acquit him unless overcome
by proof of his guilt beyond a reasonable doubt.
If you can reconcile the evidence before you with
any reasonable hypothesis consistent with the de-
fendant's innocence you should do so, and in that
case find the defendant not guilty. [120]

The Court further charges you that a reasonable
doubt is a doubt based on reason, and which is rea-
sonable in view of all the evidence, and if after an
impartial comparison of all the evidence there is a
want of sufficient evidence on behalf of the Govern-

\~S Ben A.Bostvs.

merit to convince you of the truth of the charge, you
can candidly say that you are not satisfied of the
defendant's guilt, then you have a reasonable
doubt and you should acquit him; but if after such
impartial comparison and consideration of all
the evidence you can truthfully say that you
have an abiding conviction of the defendant's
guilt, such as you would be willing to act
upon in the more weighty and important mat-
ters relating to your own affairs, then you have no
reasonable doubt and you should convict him. By
such reasonable doubt you are not to understand
that all doubt is to be removed. It is impossible in
the determination of these questions to be absolutely
certain. You are required to decide the question
submitted to you by the strong probabilities of the
case. The probabilities might be so strong as not to
exclude all doubt or possibility of error, but as to
exclude reasonable doubt. As long as you have a
reasonable doubt of a defendant's guilt you may
not convict him.

The good character of a person accused of a
crime, when proven, is itself a fact in the case. It
is a circumstance tending in a greater or less degree
to establish his innocence. It must be considered
in connection with all the other facts and circum-
stances in the case and may be sufficient in itself
to raise a reasonable doubt of a defendant's guilt;
but if after a full consideration of all the evidence
adduced the jury believes the defendant to be guilty
of the crime charged they should so find, notwith-

United States of America 157

standing proof of good reputation. A man of good
reputation may still commit crimes.

When weighing all the evidence you have an
abiding con vie- [121] tion and believe that the de-
fendant is guilty it is your duty to convict, and no
sjTiipathy justifies you in seeking for doubt, or
putting any strained or unreasonable construction
or interpretation on the evidence or the facts. Your
verdict must be unanimous. The Clerk has prepared
merely for joxvc convenience two forms of verdict,
the first of which is, after the entitlement of court
and cause: ''We, the jury, find Ben A. Bost, the

defendant at the bar, ," and a place for

you to insert your verdict and for the foreman to
sign the same ; the second of which is, after the en-
titlement of court and cause: "We, the jury, find

as to the defendant at the bar as follows

on first comit, on second coimt,

on third count, on fourth count,

on fifth count," and a place for the signature of
your foreman. When you have agreed upon a ver-
dict your foreman mil sign the same and you will
be returned into court. Should you wdsh to have
any or all of the exhibits in the case 3^ou may make
the request and they wdll be sent to you in the jury
room.

I You may state your exceptions, if any. Any ex-
{ ceptions, gentlemen ? The jury w^ill retire.

(The jurors thereupon retired from the court-
1 room to deliberate on a verdict at 1 :54 p. m. At
i2:54 p. m. of said day the jury returned into court
land delivered their verdict as follows:)

158 Ben A. Bost vs.

(Title of Court and Cause.) No. 25961-S.

"We, the Jury, find as to the defendant at
bar as follows: Guilty on first count. Guilty on
second count, Guilty on third count. Guilty on
fourth count. Guilty on fifth count.

(Signed) C. H. ADAMS,

Foreman."

(Thereafter, and on November 30, 1937, the de-
fendant duly moved the Court for a new trial, said
motion being as follows:) [122]

(Title of Court and Cause.) No. 25961-S

*' Comes now the defendant Ben A. Bost and
moves the above-entitled Court for a new trial
in the above-entitled cause, and for grounds
specifies :

''1. That on the trial the Judge admitted
improper evidence.

"2. That the verdict is contrary to the evi-
dence.

"3. That the verdict is contrary to law.

"4. That the verdict should have been for
the defendant.

"5. That the Court erred upon the trial of
said cause in deciding questions of law arising
during the course of the trial, which errors were
duly excepted to.

RAY T. COUGHLAN,
ROBERT A. ZARICH,

Attorneys for Defendant.

United States of America 159

"Service by copy is hereby admitted this 30th
day of November, 1937,

FRANK J. HENNESSY."

Thereafter the Court denied the said motion for
new trial, to which ruhng an exception was duly
taken by the defendant.

(Exception No. 19.)

Thereafter, and on December 3, 1937, the Court
imposed judgment and sentence upon defendant,
Ben A. Bost, as follows: That defendant Ben A.
Bost be imprisoned in a United States Penitentiary
to be designated by the Attorney General of the
United States for and during the time and period
of five years and pay a fine in the sum of $5000 as
to the first count of the indictment; be imprisoned
for and during the term and period of five years
on the second count of the indictment; be impris-
oned for and during the term and period of five
years on the third count of the indictment; be im-
prisoned for and during the term and period of
five years on the fourth comit of the indictment;
and be imprisoned for and during the term and
period of five years [123] on the fifth count of the
indictment. Further ordered that in default of the
pajnnent of said fine the said defendant be further
•imprisoned in the United States Penitentiary imtil
jsaid fine is paid or until he be otherwise discharged
jin due course of law. Further ordered that said
terms of imprisonment imposed on said defendant
in this cause run concurrently.

160 Ben A. Bost vs.

To the rendering of said judgment and sentence
the defendant then ajid there duly excepted.
(Exception No. 20.) [124]

Thereafter, and upon the 18th day of December,
1937, which is within the time provided by the rules
of court, the plaintiff, and the defendant, Ben Bost,
duly stipulated, by and through their respective
counsel, that the time within which the bill of
exceptions in said action on behalf of said defend-
ant and appellant, Ben Bost, be settled, be extended
to and including the 12th day of February, 1938,
and that said defendant and appellant file his assign-
ment of errors and proposed bill of excej)tions on or
before the 12th day of February, 1938, and finally,
that the plaintiff and appellee file its proposed
amendments, if any, to said bill of exceptions on or
before the 28th day of February, 1938. A^Hiereupon,
the Honorable A. F. St. Sure, the Judg(^ of said
Court, before whom and a juiy said cause was tried,
did make and enter an order on said 18th day of
December, 1937, wherein and whereby it was ordered
that the time within w^hich the bill of exceptions in
the above entitled action on behalf of the defendant
and a])])ellarit, Ben Bost. be settled, be extended to
and including the 3rd day of March, 1938, and fur-
ther, that said defendant and appellant file his
assignment of errors and proposed bill of exceptions
on or before the 12th day of February, 1938, and
finally, that the ap])ellee file his proposed amend-
ments, if any, to said bill of exceptions on or before
the 28th day of Febi-uary, 1938. Said order was

United States of America 161

based upon the stipulation last hereinabove referred
to, and good cause appearing to the court.

That thereafter, upon the 10th day of February,
1938, the appellant herein, Ben Bost, filed a written
motion and a petition in the United States Circuit
Court of Appeals for the Ninth District, asking
that his time be extended for the lodgement of his
bill of exceptions and assignment of errors. That
the Circuit Court of Appeals on the 14th day of
I February, 1938, in open court, upon the hearing of
said petition and motion, made and entered its
order extending the time for the lodgement of the
bill of excep- [125] tions and assignment of errors
ion behalf of the defendant and appellant to and
iincluding the 21st day of February, 1938, and that
Ithe appellee file its amendments, if any, on or before
jthe 3rd day of March, 1938, and it was further
ordered that the trial court settle said bill of excep-
tions within five days thereafter, namely, the 8th
day of March, 1938.

And thereafter, on the 17th day of February, 1938,
an order w^as duly entered of record, p?ts?rant to the
stipulation of the parties hereto, that the original
documents and exhibits offered in evidence in said
'cause, that are not herein re-produced, be consid-
ered incorporated and as a part of the bill of excep-
iions in said cause as though actually a physical part
thereof, and that the same be separately certified by
the clerk of this court to the United States Circuit
pourt of Appeals for the Ninth Circuit. Accord-
ingly, the exhibits in evidence herein, which are not
let forth in this bill of exceptions, the same being

162 Ben A. Bost vs.

separately certified by the clerk of this court to the
United States Circuit Court of Appeals, iu and for
the Ninth Circuit, are hereby referred to and incor-
porated and included herein and made a part hereof,
the same as if actually herein set out in full. '

Wherefore, said defendant and appellant, Ben |
Bost, hereby tenders, with said original exhibits, t
this as his bill of exceptions, which said j)roposed
bill of exceptions is all of the evidence received in
said cause, and respectfully prays that the same may
be allowed, settled and signed by the Judge of this
Court, as provided by law and the rules of court,
this said bill of exceptions being tendered to said
court this 17th day of February, 1938, which is
within the time heretofore granted by the court, and
further extended by the Circuit Court of Appeals,
pursuant to the I'ules of court and the statute ap-
pertaining thereto for the presenting, signing and
filing said bill of exceptions herein.

RAY T. COUGHLAN
JAMES M. HANLEY

Attorneys for defendani
and appellant. [126]

Service and receipt of copy of the within pro-
posed Bill of Exceptions this 17th day of February
1938, is hereby acknowledged.

F. J. HENNESSY

United States Attorney
By ROBERT McWILLIAMS

Attorneys for Plaintiff. [127]

United States of America 1 63

ORDER SETTLING AND ALLOWING
ENGROSSED BILL OF EXCEPTIONS

The foregoing Bill of Exceptions, having been
duly presented by defendent Ben A. Bost within
the time heretofore duly and regularly fixed and
allowed by the Court, and enlarged by the Order
of the Circuit Court of Appeals, made on the 14th
day of February, 1938, in accordance with law, and
the plaintiff and appellee having filed no amend-
ments to said proposed Bill of Exceptions, and said
proposed Bill of Exceptions is correct and may be
settled, allowed and approved as the Bill of Excep-
tions of said defendant and appellant, Ben A. Bost,
and it appearing that said Bill of Exceptions is
I correct in all respects, and contains all the evidence
I of said cause, and good cause appearing therefor,
;said Bill of Exceptions is hereby settled, allowed
land authenticated as and for the Bill of Exceptions
of said defendant and appellant Ben A. Bost, for
luse on appeal in said action.

Dated, March 8, 1938.
I A. P. ST. SURE

United States District Judge

I [Endorsed] : Lodged Feb. 17, 1938. Filed Mar. 8,
!l938. [128]

164 Ben A. Bost vs.

[Title of District Court and Cause.]

NOTICE OF APPEAL BY DEFENDANT
BEN BOST

Name and address of appellant: Ben Bo?t, Ne-
vada City, Calif.

Names and addresses of a])pellant's attorneys:

James M. Hanley, 210 Post St., San Francisco,
California.

Ray T. Couglilin and Robert A. Zarick, 507 Bryte
Bldg., Sacramento, California.

Offenses: Section 80 of Title 18 of the United
States Code — 5 coimts.

Date of judgment : December 3, 1937.

Brief description of judgment: Five years in
U. S. Penitentiary on fixe counts, running concur-
rently, and on first coimt also a fine of Five Thou-
sand Dollars.

Name of prison where now confined if not on bail:
San Francisco County eJail No. 1.

1, the above named Appellant, hereby ap})eal to
the United States Circuit Court of Appeals for the
Ninth Circuit from the judgment above-mentioned
on the grounds set forth below.

Dated: December 9, 1937.

BEN BOST

Appellant

Groimds of Appeal
(1) That neither of the five counts of the indict-
ment upon which defendant was convicted and sen-
tenced states facts sufficient to constitute an offense ,

United States of America 165

by A])pellant againt the laws of the United States
of America.

(2) That neither of the five counts of the Indict-
ment states facts sufficient to constitute an offense
by Appellant Tmder Section 80, of Title 18, United
States Code, for the following reasons, to wit : [129]

(a) That said counts and each of them fail to
allege or show that Appellant filed, or caused to be
filed, a false, or any, affidavit or other document
with the United States Mint or any other agency
or department of the United States of America.

(b) That said counts and each of them fail to
allege or show that Appellant in any manner what-

[ soever cheated or defrauded the United States of
'America, or any agency or department thereof, or
caused the same any pecuniary loss.

(c) That said counts and each of them fail to
allege or show that Appellant in any manner con-
cealed or covered up from the United States of
America, or any agency or department thereof, any
material fact, or any fact, within its jurisdiction.

(d) That the purported regulation promulgated
by the Secretary of the Treasury, which are the
foundation of and referred to in said five counts of
the indictment, were and are null and void because
!:hey constitute an attempt by said executive official
i:o exercise legislative power and functions.

(e) That the Gold Reserve Act of 1934 is imcon-
stitutional and void for the reason, among others,
^hat it attempts to make an unlawful delegation of
(legislative power to the Secretary of the Treasury
)f the United States of America.

166 Ben A. Bost vs.

(f) That the facts alleged in said five counts
and each of them show, at the most, a violation of
the regulations issued under the Gold Reserve Act
of 1934, which provides its own penalties, and hence
this case is not within the purview of Section 80
of Title 18, U. S. C. A.

(g) That said five counts and ea,ch of them were
and are fatally uncertain and insufficient in various
material respects.

(3) That the Court erred in overruling appel-
lant's [130] demurrer to said indictment and each
of the five counts thei-eof .

(4) Tha,t the evidence is insufficient as a matter
of law to sustain the verdict against appellant on
the five counts in said indictment upon which judg-
ment was entered.

(5) That the evidence is insufficient as a matter
of law to sustain the verdict and judgment against
appellant on a.ny of the counts to which he has been
sentenced.

(6) That the court erred in denying Appel-
lant's motion for a directed verdict of not guilty
(m each of the counts in the indictment upon which
he was convicted at the conclusion of the entire
evidence.

(7) That the court erred in denying Appellant's
motion in arrest of judgment in this case.

(8) That the court erred in denying Appellant's
motion for a new trial.

United States of America 167

(9) That the court erred in admitting and re-
fusing evidence at the trial of said case, over the
objection of Appellant, including the following:

(a) The court admitted, over the objection of
Appellant, evidence as to acts and events, and pur-
ported oifenses, occurring after the period covered
by the indictment which evidence was not within the
issues raised by the plea of not guilty to the five
counts alleged in the indictment, and were wholly
beyond and foreign to said issues.
1 (b) The Court erred in admitting, over the ob-
jection of Appellant, evidence concerning and re-
lating to various gold transactions both before and
; after the period covered b}^ the indictment in this
case, and with which Appellant was not at all con-
nected, and which said evidence was not within the
I issues raised by the plea of not guilty to each and
I every count in the indictment.

RAY T. COUGHLIN
ROBERT A. ZARICK
JAMES M. HANLEY

Attorneys for Appellant
Ben Bost [131]
(Admission of service)

[Endorsed] : Filed Dec. 9, 1937. [132]

Title of District Court and Cause.]

ASSIGNMENT OF ERRORS

Comes now Ben A. Bost, defendant and appel-
ant in above-entitled matter and makes and files

168 Ben A. Bost vs.

the following- assigiinient of errors herein upon
wliich he will apply for a reversal of judgment and
sentence heretofore made in said cause against him,
and which errors, and each of them, are to the great
detriment, injury and prejudice of said defendant
and appellant, and in violation of the rights con-
ferred upon him by la,w; and said appellant says
that in the record and proceedings in the above-
entitled cause, upon the hearing and determination
thereof in the Southern Division of the United
States Uisti'ict Court for the Northern Disti-ict of
California, there is manifest error, in this, to wit :

I.

The Court erred in overruling appellant's de-
murrer to the indictment in this cause and each
count thereof for the following reasons, among
others, to wit:

1. The facts set forth in the First Count do net
state facts sufficient to constitute an offense against
the United States.

2. That it does not appear in said Indictment,
in the First Comit thereof, nor can it be ascertained
therefrom, whether this defendant is charged with a
violation of the provisions of Section 80 of Title
18 of the United States Criminal Code, or a vio-
lation [133] of the Cold Reserve Act of 1934.

3. lliat it does not appear in said First Count
of the Indictment, nor can it be ascertained there-
from how or in what manner this defendant at-
tempted to or (lid defraud the Government of the
United States or any l)ei:)artment thereof.

United States of America 169

4. That it does not appear in said Indictment,
in the First Count thereof, that this defendant pre-
sented any claim upon or against the Government
of the United States, or any Department or officer
thereof, or any corporation in which the United
States of America is a stockholder.

5. That it does not appear in said Indictment,
in the First Coiuit thereof, that this defendant
made or caused to be made or presented or caused
to be presented any claim for payment or approval
to or by any person or officer of the civil, military
or naval service of the United States, or any de-
partment thereof, or any corporation in which the
United States of America is a stockholder.

6. That it does not appear in said Indictment,
[ in the First Count thereof, that this defendant
■ made, caused to be made or presented or caused to
, be presented a claim to any person or officer of the

Grovernment of the United States having authority

I to allow and approve such claim.

i

I Demurring to the Second Count of said Indict-
ment, defendant specifies as follows :

1. The facts set forth in the Second Count do
not state facts sufficient to constitute an offense
against the United States.

; 2. That it does not appear in said Indictment, in

Ithe Second Count thereof, nor can it be ascertained
therefrom, whether this defendant is charged with
a violation of the provisions of Section 80 of Title
18 of the United States Criminal Code, or a [134]
violation of the Gold Reserve Act of 1934.

170 Ben A. Bost vs.

3. That it does not apjjear in said Second Count
of the Indictment, nor can it be ascertained there-
from how or in what manner this defendant at-
tempted to or did defraud the Government of the
United States or any Department thereof.

4. That it does not appear in said Indictment,
in the Second Count thereof, that this defendant
presented any claim upon or against the Govern-
ment of the United States, or any Department or
officer thereof, or any corporation in which the
United States of America is a stockholder.

5. That it does not appear in said Indictment,
in the Second Count thereof, that this defendant
made or caused to be made or presented or caused
to be presented any claim for payment or approval
to or by any person or officer in the civii, military
or naval ser\dce of the United States, or any de-
partment thereof, or any corporation in which the
United States of Ameica is a stockholder.

6. That it does not appear in said Indictment,
in the Second Coimt thereof, that this defendant
made, caused to be made or presented or caused to
be presented a claim to any person or officer of the
Government of the United States having authority
to allow and approve such claim.

Denunring to the Third Count of said Indictment,
defendant specifies as follows:

1. The facts set forth in the Third Court do not
state facts sufficient to constitute an offense against
the United States.

2. That it does not appear in said Indictment,
in the Third Count thereof, nor can it be ascertained

United States of America 171

therefrom, whether this defendant is charged with
a violation of the provisions of Section 80 of Title
18 of the United States Criminal Code, or a vio-
lation of the Gold Reserve Act of 1934. [135]

3. That it does not appear in said Third Count
of the Indictment, nor can it be ascertained there-
from how or in what manner this defendant at-
tempted to or did defraud the Government of the
United States or any Department thereof.

4. That it does not appear in said Indictment,
in the Third Count thereof, that this defendant
presented any claim upon or against the Govern-
ment of the United States, or any Department or
Officer thereof, or any corporation in which the
United States of America is a stockholder.

5. That it does not appear in said Indictment,
in the Third Count thereof, that this defendant
made oi* caused to be made or presented or caused
to be presented any claim for payment or approval

I to or by any pei'son oi' officer in the civil, military
or naval service of the United States, or any de-
' partment thereof, or any corporation in which the
• United States of America is a stockholder.

6. That it does not appear in said Indictment,
in the Third Count thereof, that this defendant
made, caused to be made or presented or caused to
jbe presented a claim to any person or officer of the
Government of the United States having authority
to allow and approve such claim.

172 Ben A. Bost vs.

Demui-rin^ to the Fourth Coimt of said Indict-
ment, defendant specifies as follows:

1. The facts set forth in the Fourth Count do
not state facts sufficient to constitute an offense
against the United States.

2. That it does not appear in said Indictment,
in the Fourth Count thereof, nor can it be ascer-
tained therefrom, whether this defendant is charged
with a violation of the pro^dsions of Section 80 of
Title 18 of the United States Criminal Code, or a
violation of the Gold Reserve Act of 1934. [136]

3. That it does not appear in said Fourth Count
of the Indictment, nor can it be ascertained there-
from how or in what manner this defendant at-
tempted to or did defraud the Government of the
United States or any Department thereof.

4. That it does not appear in said Indictment,
in the Fourth Count thereof, that this defendant
presented any claim upon or against the Govern-
ment of the United States, or any Department or
Officer thereof, or any corporation in which the
United States of America is a stockholder.

5. That it does not appear in said Indictment, in
the Fourth Comit thereof, that this defendant made
or caused to be made or presented or caused to be
presented any claim for payment or approval to
or by any person or officer in the civil, military or
naval service of the United States, or any depart-
ment thereof, or any corporation in which the
United States of America is a stockholder.

6. That it does not appear in said Indictment,
in the Fourth Count thereof, that this defendant

United States of America 173

made, caused to be made or presented or caused to
be presented a claim to any person or officer of the
Government of the United States having authority
to allow and approve such claim.

Demurring to the Fifth Count of said Indictment,
defendant specifies as follows:

1. The facts set forth in the Fifth ('ount do not
state facts sufficient to constitute an offense against
the United States.

2. That it does not appear in said Indictment, in
the Fifth Count thereof, nor can it be ascertained
therefrom, whether this defendant is charged with
a violation of the provisions of Section 80 of Title
18 of the United States Criminal Code, or a viola-
tion of the Cold Reserve Act of 1934. [137]

3. That it does not appear in said Fifth Count
of the Indictment, nor can it be ascertained there-
from how or in what manner this defendant at-
tempted to or did defraud the Government of the
United States or any Department thereof.

4. That it does not appear in said Indictment,
in the Fifth Count thereof, that this defendant pre-
sented any claim upon ov against the Government
of the United States, or any Depai'tment or Officer
thereof, or any corporation in which the United
States of America is a stockholder.

; 5. That it does not appear in said Indictment,

, in the Fifth Comit thereof, that this defendant made

i or caused to be made or presented or caused to be

presented any claim for payment or approval to

or by any person or officer in the civil, military or

174 Ben A. Bost vs.

naval service of the United States, or any depart-
ment thereof, or any corporation in which the
United States of America is a stockholder.

6. That it does not appear in said Indictment,
in the Fifth Count thereof, that this defendant
made, caused to he made or presented or caused
to be presented a claim to any person or officer of
the Government of the United States having author-
ity to allow and approve such claim.

II.

That the Court eri'ed in admitting the following
testimony ovei- the objection and exception of the
defendant :

''Mr. McWilliams: I desire to offer the map in
evidence and ask to have it marked as Govern-
ment's Exhibit.

"Mr. CoTighlin: Might I inquire the purpose?

"Mr. McWilliams: Yes, it is for the purpose of
showing that neither on this map nor any other
official map is there any Cougar Canon, although
there are many canons and other places and to\VQS
and topographical points indicated on the map, but
no Cougar Canon. [138]

"Mr. Coughlin: That is objected to on the ground
that no proper foimdation has been laid for the
ma,p.

"The Court: You will have to proceed further
and lay a foundation.

"Mr. McWilliams: Q. Will you state what you
mean when you say that this is an official map in
your department?

United States of America 175

*'A. That is a map that we use for all of our
demonstration work in the National Forest, and
was prepared in San Francisco from U. S. Surveys,
General Land Office Surveys, and our own surveys,
it was compiled from all different sources into one
map.

"The Court: Who compiled it?

"A. It was done under my supervision by one of
the di-aftsmen.

"Q. It is correct?

**A. It is as fai' as the information we had.

''Q. Where did you get your information?

"A. From the United States Geological Survey,
the Genei-al Land Office Survey, and our own sur-
veys, timl)er surveys.

"The Court: Is that all?

"Mr. McWilliams: Yes.

"Mr. Coughlin: May I further urge the objec-
tion that it is heai'say?

"The Court: Overruled.

"Mr. McWilliams: May it be marked as United
States Exhibit 1?

"The Court: Yes.

"Mr. Coughlin: We note an exception.
I "(The map was marked U. S. Exhibit 2.)"

j III.

! That the Court erred in admitting the following
testimony over the objection and exception of the
defendant :

"Mr. McWilliams: I desire to offer these in evi-
dence as one exhibit.

176 Ben A. Bost vs.

• "Mr. Coughlin: To which we object, if your
Honor please, on [139] the ground that the proper
foundation has not been hiid, that they are hearsay.

''The Court: Overruled.

"Mr. Coughlin: Exception,

"(The maps were marked 'U. S. Exhibit 3.')"

IV.

That the court erred in admitting the following
testimony over the objection and exception of the
defendant :

"Q. What did he state, if anything, as to whether
he knew these men?

"Mr. Coughlin: To which we object on the
ground that

"Mr, Mc Williams: I will withdraw the ques-
tion. Proceed with the conversation.

"Mr. Coughlin: I am going to object to this line
of testimony on the ground that the corpus delicti
has not been proven.

"The Court: Overruled.

"Mr. Coughlin: May I have an exception?

"The Court: Yes."

V.

That the court en-ed in admitting the follo\\"ing
testimony over the objection and exception of the
defendant :

"Q. State the conversation that occurred on that
occasion ?

"Mr. Coughlin: The same objection.

"The Court: Overruled.

"Mr. Coughlin: Note an exception."

United States of America Yll

VI.

The Court erred in admitting' the following testi-
mony over the obpection and exception of the de-
fendant :

''Mr. Coughlin: In order that I do not interrupt
may it be understood that my objection goes to this
entire line of testimony? [140]

''The Court: Yes.

"Mr. Coughlin: On the ground the corpus delicti
has not been proven.

"The Court: Yes. Of course, if it is not con-
nected up you can move to strike it out.

"Mr. Mc Williams: Yes, that is stipulated to."

VII.

That the court erred in admitting the following
testimony over the objection and exception of the
defendant :

"Q. When and where and with whom did you
make such an investigation %

"A. Well, on August 18, 1936, 1 went to the office
of Mr. DeWitt Nelson, superintendent of the Tahoe
National Forest in Nevada City and searched the
maps and records in his office, and questioned Mr.
Nelson, and questioned certain of his rangers regard-
ing Cougar Canon, or Lucky Gravel mining claim,
and found no information.

"Mr. Coughlin: We object to this and ask that
the answer be stricken on the groimd it is hearsay.

"Mr. Mc Williams: I submit it is not hearsay. It
is direct information to the point that there was
no such place given,
i "The Court: Denied.

178 Ben A. Bost vs.

"Mr. Coughlin: May I have an exception, your
Honor?"

VIII.

That the court erred in admitting the following
testimony over the objection and exception of the
defendant :

"Q. Did you make inquiries during the course
of that trip?

"A. Yes, we interview^ed the road supervisor,
McFadden, I believe his name was, at Forest Hill,
who stated he was very familiar with all of that
territory

"Mr. Coughlin: I submit that this is hearsay
testimony and I ask that the answer be stricken
out. [141]

"Mr. Mc Williams: I submit it comes in under
that exception which permits the result of searches
to be admitted. We have authorities, if your Honor
desires them.

"Mr. Coughlin: He is testifying now to what
someone else told him.

"Mr. Mc Williams: I have that in mind.

"Mr. Coughlin: That is not admissible.

"Mr. Mc Williams: I anticipated that objection
and looked \\\) the law, and we have the authorities
if necessary.

"Mr. Coughlin: May I have an exception?

"The Court: Yes, the objection is overruled."

IX.

That the Court erred in admitting the following
testimony over the objection and exception of the
defendant :

United States of America 179

''Q. Did yoii ever hear of Hans Hensen, G. A.
Swissler or Larry Larsen ?

"A. No.

"Mr. Coughlin: To which we object on the
ground it is immaterial, irrelevant, and incompe-
tent, and calls for the opinion of the witness, and is
hearsay.

"The Court: Overruled.

"Mr. Coughlin: Exception."

X.

That the Court etrred in admitting the following
testimony over the objection and exception of the
defendant :

"Q. Did you ever hear of Hans Hensen or G.
A. Swissler, or Larry Larsen as miners in that area ?

"Mr. Coughlin: We will interpose the same ob-
jection as we have heretofore.

"The Court: Overruled.

"Mr. Coughlin: Note an exception." [142]

XL

That the Court erred in admitting the following
testimony over the objection and exception of the
defendant :

* "Q. Are you familiar also with other mining
activities in the vicinity where quantities of gravel
aave been handled besides the quantity that you are
particularly familiar with %

"A. Well, during my time there has not been
7ery much gravel mining outside of our own.

180 BenA.Bostvs.

"Mr. Coughlin: We ask that the answer be
stricken out on the ground it is not responsive.
"The Court: Denied.
' ' Mr. Coughlin : Exception. ' '

XII.

That the Court erred in admitting the following
testimony over the objection and exception of the
defendant :

"Q. Have you ever run across a man by the
name of Hans Hensen, G. A. Swissler, oi' Larry
Larsen, miners in that area ?

"A. m.

"Mr. Coughlin: Just a moment. We object to
that on the ground it calls for a conclusion or opin-
ion as to whether he ever rim across them. There
is no foimdation laid here to show that this man
may have known them.

"The Court: He has lived on the Divide all his
life. Overruled.

"Mr. Coughlin: Exception."

XIII.

That the Court erred in admitting the following
testimony over the objection and exception of
defendant :

"Q. What was the character of the establish-
ment that was being operated by him at that time
in Nevada City?

"Mr. Coughlin : To which we object on the ground
it is immaterial, irrelevant, and incompetent, no
time, place, or any- [143] thing else fixed.

United States of America 181

''The Court: Overruled.
''Mr. Coughlin: Exception."

XIY.

That the Court erred in admitting the following
testimony over the objection and exception of the
defendant :

"Q. Do you know why the grinder is used?

"A. I do.

"Q. Do you know — 'Yes' or 'No"?

"A. Yes.

"Q. Will you tell the jury?

"A. The grinder is used to grind quartz rock.

"Q. What kind of quartz rock?

"A. A Quartz rock which bears the gold.

"Mr. Coughlin: I object to that.

"The Court: Overruled.

"Mr. Coughlin: Exception."

XY.

That the Court erred in admitting the following
testimony over the objection and exception of the
defendant :

"Q. In your ex])erience over the years, will you
state how many gravel mines you have run across or
become familiar with that run asi high in gold as .56
ounces per cubic yard ?

"Mr. Coughlin: I object to that. I do not see
the relevancy of it.

"The Court: Overruled.

"Mr. Coughlin: Exception.

*'A. I don't recall any."

182 Ben A. Bost vs.

XVI.

That the Court erred in denying appellant's mo-
tion that the Conrt instruct the jury at this time
to return a verdict of not guilty on the ground that
the evidence is insufficient to sustain any verdict
save and except a verdict of not guilty. [144]

XVII.

That the Court erred in admitting the following
testimony over the objection and exception of the
defendant :

"Q. Did you know that in the year 1931 he en-
deavored to get his gold buyer's license, required
under the State law, renewed, and that as a result
of the protests and the testimony that was given of
irregularities in his method of conducting business
that his application w^as denied?

''Mr. Coughlin : To which we object on the ground
it is not proper cross-examination, and assimiing a
fact not in evidence.

"The Court: Overruled.

"Mr. Coughlin: Exception."

XVIII.

That the Court eri-ed in denying appellant's mo-
tion for a directed verdict of not guilty by defendant
at the conclusion of the entire* evidence, which said
ruling was duly excei)ted to by appellant. Said
Court erred in this, because there is not sufficient
evidence to sustain any other verdict sav(* and except
a verdict of not guilty.

United States of America 183

XIX.

That the Court erred in denying appeUant's mo-
tion for a new trial, which said ruling was duly
excepted to by appellant. Said Court erred in this,
because of all of the aforesaid reasons, and further
because of errors of law at the trial of said cause.

Wherefore, the said defendant and appellant,
George A. Bost, prays that by reason of the errors
aforesaid the judgment and sentence imposed upon
him in this cause be reversed and held for naught.
Respectfully submitted,
RAY T. COUGHLIN
JAMES M. HANLEY

Attorneys for Defendant and
Appellant. [145]

Service and receipt of copy of the foregoing as-
signment of errors this 17tli day of February, 1938,
is hereby acknowledged.

F. J. HENNESSY

United States Attorney.
By ROBERT McWILLIAMS
Attorney for Plaintiff.

[Endorsed] : Filed Feb. 17, 3938. [146]

I [Title of District Court and Cause.]

' STIPULATION RE EXHIBITS

1 It is hereby stipulated by and between the plain-
jtiff in the above entitled cause and the defendant
land appellant Ben Bost, through and by their re-

184 Ben A, Bost vs.

spective counsel, that an order may be made by this
Court certifying all of the original exhibits not set
out in full in the Bill of Exceptions, as a part
thereof, and as a part of the record on said appeal,
to the United States Circuit Court of Appeals for
the Ninth Circuit.

Dated, February 15th, 1938.

FRANK J. HENNESSY
United States Attorney
By ROBERT McWILLIAMS

Attorneys for Appellee,
JAMES M. HANLEY
RAY T. COUGHLIN

Attorneys for Appellant.

[Endorsed] : Filed Feb. 17, 1938. [147]

[Title of District Court and Cause.]

ORDER RE EXHIBITS

Pursuant to stipulation heretofore entered into by
and between the plaintiff and the defendant and
appellant Ben Bost, in the above entitled cause, that
the exhibits not set out in full in the Bill of Excep-
tions filed herein ])v certified to the United States
Circuit Court of Appeals for the Ninth Circuit, as
a pai-t hereof; and good cause appearing therefore,

It is therefore Ordered that the Clerk of this
Court be, and hereby is, directed to certify to the
United States Circuit Court of Appeals for the

United States of America 185

Ninth Circuit, all such original exhibits herein which
are not incorporated in full in said Bill of Excep-
tions, as a part hereof.

Dated, Febniary 17, 1938.

A. F. ST. SURE
Judge of said Court.

[Endorsed] : Piled Feb. 17, 1938. [148]

[Title of District Court and Cause.]

PRAECIPE

To the Clerk of said Court :

Please issue a Transcript of the record to the
Circuit Court of Appeals in the above entitled
cause in connection with the appeal of the defend-
ant Ben A. Bost, and include therein the following
papers and orders, with all filing and other endorse-
ments thereon, to wit:

1. Indictment.

2. Statement of Docket Entries.

3. Arraignment and plea of defendant.

4. Demurrer of defendant, with order overruling
the same.

5. The Judgment and sentence of the Court as to
the defenda^, and the verdict as to defendant.

6. Motion for new trial and order denying the
same.

7. Minutes showing motion in arrest of judg-
ment and order denying the same. [149]

186 Ben A. Bostvs.

8. Stipulation and order for extension of time
for filing and settlement of Bill of Exceptions and
filing Assignment of Errors ;

9. Order of Circuit Court of Appeals for Exten-
sion of Time for filing and Settlement of Bill of
Exceptions and Assignment of errors.

10. Stipulation and order for certification of
Exhibits to the United States Circuit Court of
Appeals.

11. Bill of Exceptions, and Order of Court ap-
proving and settling said Bill of Exceptions.

12. Assignment of Errors.

13. Notice of Appeal by defendant.

14. This Praecipe.

In preparing the foregoing record, please elimi-
nate the title of court and cause.

Dated, April 20, 1938.

JAMES M. HANLEY
BAY T. COUGHLIN

Attorneys for Defendant.

Service of the above admitted this 21st day of
April, 1938.

F. J. HENNESSY

United States Attorney
By ROBT. Mc WILLIAMS

Deputy United States Attorney.

[Endorsed] : Filed Apr. 21, 1938. [150]

United States of America 187

[Title of District Court and Cause.]

FORM OF CLERK'S STATEMENT OF
DOCKET ENTRIES TO BE FORWARDED
UNDER RULE IV.

(To accompany duplicate notice of appeal to the
United States Circuit Court of Appeals.)

1. Indictment for violation of 18 USCA, Sec. 80.
(False affidavit — Gold Reserve Act) filed March 30,
1937.

2. Arraignment May 1, 1937.

3. Plea to indictment May 18, 1937.

4. Motion to withdraw plea of guilty denied

,19

5. Trial by jury, Nov. 23, 24 & 26, 1937.
, 6. Verdict Nov. 26, 1937.

I 7. Judgment — (with terms of sentence) five
lyears and $5000.00 fine on count one, five years on
leach of counts 2, 3, 4 & 5 to rim concurrently,
[entered Dec. 3, 1937.
J 8. Notice of appeal filed Dec. 9, 1937. [151]

[Title of District Court.]

CERTIFICATE OF CLERK TO TRANSCRIPT
OF RECORD ON APPEAL

I, Walter B. Maling, Clerk of the United States
District Court, for the Northern District of Cali-
fornia, do hereby certify that the foregoing 151
i
pages, numbered from 1 to 151, inclusive, contain a

188 Ben A. Bost vs.

full, true, and correct transcript of the records and
proceedings in the case entitled United States of
America, Plaintiff, vs. Ben A. Bost, Defendant, No.
25961-S, as the same now remain on file and of
record in my office.

I further certify that the cost of preparing and
certifying the foregoing transcript of record on
appeal is the sum of $12.35 and that the said amount
has been paid to me by the Attorneys for the appel-
lant herein.

In Witness Whereof, I have hereunto set my
hand and affixed the seal of said District Court, this
4th day of May, A. D. 1938.

[Seal] WALTER B. MALING

Clerk.
J. P. WELSH

Deputy Clerk. [152]

[Endorsed]: No. 8768. United States Circuit
Court of Appeals for the Ninth Circuit. Ben A.
Bost, Appellant, vs. United States of America, Ap-
pellee. Transcript of Record. Upon Appeal from
the District Court of the United States for the
Northern District of California, Southern Division.

Filed September 29, 1938.

PAUL P. O'BRIEN,

Clerk of the United States Circuit Court of Appeals
for the Ninth Circuit.

No. 8768

U

IN THE

United States Circuit Court of Appeals

For the Ninth Circuit

Ben a. Bost,

vs.

United States of America,

Appellant,

Appellee.

BRIEF FOR APPELLEE.

Frank J. Hennessy,

United States Attorney,

Robert L. McWilliams,

Assistant United States Attorney,

Sydney P. Murman,

Assistant United States Attorney,
Post Office Building, San Francisco,

Attorneys for Appellee.

Subject Index

Page

Introduction 1

Statement of the Case 2

Indictment is Sufficient 12

The maps offered and received in evidence were admissible 19

The testimony of Agent Lynn regarding his conversation

with appellant was admissible 23

The testimony regarding the searches made and the answers

to inquiries was admissible 24

Table of Authorities Cited

Cases T5

rages

Caha V. United States, 152 U. S. 211 16

Chesapeake & Delaware Canal Co. v. United States, 240

Fed. 903, 907 21

Dooley, F. T., Lumber Co. v. United States, 63 Fed. (2d)

384, 386 17

Grant v. Chicago R. Co., 252 Pac. 382 3

Greenbaum v. United States, 80 Fed. (2d) 113, 126 22

Herbert v. Lankershim, 9 Cal. (2d) 409, 472 3

Hills V. United States, 97 Fed. (2d) 710 12

Long V. United States, 59 Fed. (2d) 602 20

Nichols V. United States, 48 Fed. (2d) 46 24

United States v. Romain, 255 Fed. 253 20

People V. Eppinger, 105 Cal. 36 25

People V. Sanders, 114 Cal. 216 25

People V. Sharp, 19 N. W. 168 26

People V. Tomalty, 14 Cal. App. 224, 231 22

Sandy White v. United States, 164 U. S. 100, 103 21

Sheehan v. Vedder, 108 Cal. App. 419, 425, 426 20

Statutes

Gold Reserve Act of 1934 (31 U. S. C. 442) 16

Regulations, Sec. 35 16

Regulations, Sec. 38 16

18 U. S. C, Sec. 80 1, 13, 18

18 U. S. C, Sec. 556 13

No. 8768

IN THE

United States Circuit Court of Appeals

For the Ninth Circuit

Ben a. Bost,

Appellant^
vs.

United States of America,

Appellee.

BRIEF FOR APPELLEE.

INTRODUCTION.

As appellant has stated, he was convicted by a jury
on a charge of violating Section 80 of Title 18 of the
United States Code. His conviction was based on his
having knowingly falsified certain material matters
in connection with the sale to the Mint of certain
gold. The indictment charges that appellant on vari-
ous specified occasions falsely represented that the
gold so sold by him had been mined by him from the
''Lucky Gravel" mining claim, which, according to
his representations w^as located in Cougar Canyon,
El Dorado Comity, California, of which claim he said
; he was the owner, whereas in truth and in fact he was
not the owner of any mining claim in that County
known as or called the ''Lucky Gravel" claim, and

whereas in fact the gold in question had not come
from the source si)ecified by him in the verified affi-
davits submitted by him to the Mint. False affidavits
to the same effect were tendered along with the gold
offered by him for sale on five different occasions
during the years 1934 and 1935.

Counsel for appellant have seen fit in their brief to
argue at the outset the points of law advanced by
them and then to give a more detailed statement of
the facts to the Court. We believe that the Court \\i\\
follow the testimony more easily if we reverse that
order and summarize the facts upon which the indict-
ment was founded before we undertake to consider
appellant's legal contentions.

STATEMENT OF THE CASE.
It was the theory of the Government, which was
upheld by the verdict of the jury and by the ruling
of the Court denying appellant's motion for a new
trial (R. p. 39) that the claim of appellant to have
recovered the gold in question from this so-called
*' Lucky Grravel" mining claim, was but a figment of
his imagination, and that the gold had in fact been
secured by appellant from some other source or
sources. The source or sources referred to, although
not material in this case, may be inferred to a certain
extent from the general tenor of the evidence and
particularly from the testimony of Mr. Bongard, who
was an employee of the State, and whose business it
was to investigate the theft of so-called ' 'high-grade"
ore from the mines of California. (R. p. 107.)

Appellant's story of the circumstances under which
he secured the gold in question has at least the merit
of originality. Unfortunately for appellant, it was
neither believed by the jury nor by the trial Court.

I After considerinsr it one is reminded of the statement

1

of the Supreme Court of Montana in an opinion

[recently quoted with approval by the Supreme Court

[of California to the effect that "The credulity of

Courts is not to be deemed commensurate with the

facility and vehemence with which a witness swears".

! {Grant v. Chicago R. Co., 252 Pac. 382, quoted by the

■California Supreme Court in Herbert v. Lankershim,

i9 Cal. (2d) 409, 472.) The appellant's story of the

[circmnstances under which he had secured the gold in

'question, which in a period of 18 months aggregated

over $15,000, was substantially as follows : In the year

1886 appellant had met a man in Trinity County by

the name of Swissler. He had known Swissler there

as a boy for a period of eight months. Appellant had

not thereafter seen this friend of his youth until he

jshowed up in appellant's assay office 42 years later,

ibeing some time in the year 1928. At that time this

friend told appellant that he was prospecting and

that he would like Bost to put up $250 to help him

carry on his work. He told appellant that ''he thought

he would strike pay gravel ; that he was in the gravel

district". Whereupon and without further investiga-

Idon upon the part of appellant he turned over the

sum requested to Swissler. (R. p. 120.) For this

.$250 Bost was given a one-half interest in such dis-

leovery as Swissler might make. (R. p. 127.) This

interest was evidenced by a bill of sale or receipt

which Bost could not find. (R. p. 127.) Swissler was
to work the mine when it was discovered, and Bost
was to get ten per cent, presumably of the net profits.
(R. p. 127.) Bost inquired of Swissler what the name
of the mine was and was told that it did not have a
name. Bost then said, "We will call it 'The Lucky
Gravel' ", to which Swissler agreed. (R. p. 120.)
Swissler at that time stated that the mine was in
Cougar Canyon, El Dorado County. Bost made no
further inquiry in regard to the mine. Thereafter,
according to Bost, on several occasions he made addi-
tional advances to Swissler. On those visits Swissler
would bring over ''bits of gold". (R. p. 124.) Bost
could not recall how much those lots of gold brought
in amounted to but thought that one of those "bits"
amounted to 40 ounces, which at the then market
value of gold should have been worth in excess of
$800. Finally, in October, 1930, when the alleged
Swissler called on Bost for more money Bost stated
that he did not like to make any more advances unless
he saw the mine. Swissler then stated that he would
take Bost to it. The trip as described by Bost was
made under incredible circumstances. He and Swiss-
ler went to the mine at night and returned at night.
As a result Mr. Bost was, unfortunately for him,
unable to take R. C. Lymi, Agent of the Bureau of
Internal Revenue, to the mine when that gentleman,
not being satisfied with the story told by Bost, asked
him to show the Agent the property from whicli he
said that he had secured the gold sold to the Mint.
(R. p. 61.) Moreover, there was an unfortunate in-
consistency in the version of that trij) as given by

Bost on the witness stand and the version as he had
told it to the Agent, as it was testified to by the Agent.
Thus Mr. Bost testified on the trial that 3Ir. Sivissler,
when the subject of the trip to the mine was discussed
between them, said that he had an old truck in Nevada
City, where Bost then had his office and where the
interview occurred, and that they w^ould use that
truck in going along the highway to Rattlesnake
Bridge below Auburn, where the trail branched off
from the highway to the mine. (R. p. 121.) Bost was
quite specific in describing the route taken. After
leaving Rattlesnake Bridge they traveled up the
Middle Fork of the American River a distance of
between thirty and forty miles to a point opposite
Kennedy Hill. Then they turned off to the right and
proceeded along a trail five or six miles until they
reached the mine. (R. p. 127.) And yet the mine,
which was improved by a 1000-ft. tunnel (R. p. 128)
had never been heard of, so far as the record discloses,
by anyone other than by appellant and his alleged
associates, and could not be located either by appel-
lant or by any of the Government's agents who made a
thorough search for it. Agent Lynn's version of the
trip, as told him by Bost, varied in very material
respects. According to the story told by Bost to L\Tin,
it was not Swissler who had taken Bost to see the
mine but one Hensen. Moreover, according to the
statement made by Bost to Lynn, who testified from
his notes made at the time of their conversation and
turned over to counsel for appellant for his inspection
(R. p. 148), his guide did not take him in the truck
referred to by Bost, but in some fashion that was not

made clear by his testimony Bost found his own way
to Rattlesnake Bridge, where Hensen met him with
some jacks. (R. p. 61.) The two, Bost and Hensen
(or Bost and Swissler as the case may have been),
started from Rattlesnake Bridge after dark, traveled
for about seven hours, arriving at the mine while it
was still dark. Bost got up about 7 or 8 o'clock in the
morning and, after breakfast, spent about two hours
examining the property. (R. p. 128.) He said there
was a 2-inch stream of water adjoining the mine
which he admitted would be very valuable up in that
county. But notwithstanding that fact Bost made no
inquiry and no investigation relative to water rights
on the stream. (R. p. 129.) He panned about three
panfuls of gravel, at the expiration of which time he
was tired and rested "all that afternoon and that
night until about 4 o'clock the next morning". He
then got up and had breakfast and left the mine,
reaching Auburn at 1:30. (R. p. 129.) It developed
from Bost's testimony on direct examination that he
had only made the trip to the property out of curiosity
and because Swissler had asked for another advance.
(R. p. 120.) But on cross-examination he testified
that before they started on the trip Swissler had
offered to sell him the remaining half interest in the
property for an additional $250. (R. p. 131.) He
accepted this offer without having made any investi-
gation of Swissler 's title to the property or of the
water rights pertaining to it. He admitted that he
felt sure that the claim had not been recorded by
Swissler because he, Bost, had named the claim him-
self. He said that he had not thought it necessary to

. 7

record the claim in his own name since Swissler
'' claimed to own the ground". (R. p. 122.) Such
claim was entirely inconsistent however with the whole
tenor of his direct examination. Moreover, according
to Bost's story on cross-examination, when he went
on the trip taking the $250 along to buy the second
half interest he '' couldn't say as to the approximate
amount of gold that had been jjroduced by the mine",
and turned over to him between the spring of 1928
and October, 1930. (R. p. 131.) Why he took the
$250 along instead of making the payment on his
return in the event that he decided to make the pur-
chase was not explained by Bost.

The lease that was signed by Bost in January, 1932,
was executed imder equally mysterious circumstances.
At that time it will be borne in mind Bost claimed to
own the whole property. The gentleman whose names
purported to be signed to the alleged lease, Messrs.
Swissler, Hensen and Larsen, are said to have ap-
peared before Bost on or about January 2, 1932. They
told Bost that they wanted to take a lease on the
mine: 'Hhat they wanted to put more men to work
there and that they wanted the lease so that they could
give the other people a sub-lease". (R. p. 131.) After
' the execution of the lease, Hensen brought in, accord-
; ing to one portion of Bost 's testimony, six lots of gold
I ranging in amount from approximately 80 ounces to
I approximately 120 ounces. (R. p. 133.) Immediately
I thereafter Bost testified that after the lease was sigTied
/^Swissler brought in the gold". (R. p. 133.) Although
I he was interested in getting his 10 per cent provided

8 .

for in the lease he made no record of any kind of the
shipments that were brought in.

Suddenly and for some reason that is not clearly
explained, the lessees seem to have mysteriously
dropped out of existence. After the last shipment of
gold Bost saw nothing more of them. He at no time
wrote to or received any letters from them. (R. pp.
133, 134.) Although his alleged lessees had leased the
property in order to increase the number of men at
work and to give a sub-lease on it, Bost had no idea
who the parties were to whom the sub-lease was to be
given. As he testified, ''I had a 10 per cent interest
but I had no reason to be interested in who they sub-
leased to nor whether they were capable mmers or
financially responsible". (R. p. 134.)

In view of the fantastic story told by Bost in at-
tempted explanation of the origin of the gold sold
by him to the Mint, it should hardly be necessary to
go into the testimony of the Government which was
introduced in disproof of appellant's story. Bost's
testimony would seem to carry its own refutation
upon its face. Nevertheless as a measure of precau-
tion we will summarize the case made out by the
Government. At the outset a representative of the
United States Forest Service was called (R. p. 51) to
identify an official map of the El Dorado National
Park. This was offered for the purpose of showing
that on this map, which included in detail the terri-
tory in which the alleged Lucky Gravel mine was said
to have been located, no Cougar Canyon appeared.
(The question of the admissibility of this map we

shall consider later.) A representative of the United
States Geological Survey also identified certain of the
topographic maps made and used by his Department.
These maps, which included El Dorado County in
detail, were also offered in evidence for the same pur-
pose. (R. p. 54.)

Thereafter witness after witness was called to tes-
tify to the non-existence of the alleged Lucky Gravel
mine and to a complete lack of knowledge in that
locality of any of the alleged lessees of that mine.
Thus, R. C. Lynn, the Agent of the Bureau of In-
ternal Revenue who had interrogated Bost in regard
to the alleged mine, testified to the search made for it
by him. He was familiar with the Rattlesnake Bridge
to which Bost had referred and to the highway on
which it was constructed. (R. p. 59.) He told of the
inquiries he had made and the searches on maps and
records in the offices of the different county officials.
He told of questioning the Forest Rangers and other
Federal officials in that locality but without success.
(R. pp. 65, 66.) The Government also called Charles
B. Rich of the United States Secret Service (R. p.
96) who testified to his efforts to locate the mythical
Lucky Gravel mine. He told of covering all of the
'territory described by Bost without success. He told
of the different inquiries made of State and Comity
officers in that locality and of the examination of the
(records of the County assessor and of the County
Surveyor. He told of the search of the registration
'list in an effort to secure some information either
;about the mine or about Messrs. Swissler, Hensen or

10

Larsen. All of the efforts were without success. (R.
pp. 96, 99.)

Mr. John Bongard was also called by the Govern-
ment. Mr. Bongard was the ''high grade" Inspector
of the State Division of Mines, which position he had
held for ten years. In that office it was his duty to
supervise the issuance of licenses to gold buyers and
to keep track of "high grading", which he explained
referred to the theft of high-grade ore from the dif-
ferent mines of the State. Mr. Bongard told of his
inquiries throughout El Dorado Comity and particu-
larly in the vicinity described by Mr. Bost. He told
of the inquiries made throughout that territory. He
also testified to his examination of the records of the
County Recorder and of the Comity Assessor in a
search for some reference either to the Lucky Gravel
mine or to any of the parties connected with it. As he
testified "we found no record either of the mine or of
the men mentioned". (R. p. 108.)

Thereafter witness after witness from that County
was called to testify to his knowledge of the locality
involved and to his ignorance of any Lucky Gravel
mine as well as of the alleged lessees of that mine.
Included among those witnesses were a Deputy
Sheriff of the County, and also a mail carrier who
had lived in that vicinity for approximately 30 years.
(R. p. 79.) Incidentally this witness testified that he
had mined for 25 years in that locality and that he had
never heard of any Cougar Canyon or of any Lucky
Gravel mining claim. Moreover, he testified that dur-
ing that period of time there had not been much

11

milling in that locality. He further stated that there
had been no real producers outside of those with
which he had been connected, since he had moved
into the district about 29 years before. He explained
that by ''real producers" he referred to a mine that
would run from 10 cents to 50 cents a cubic yard. (R.
p. 81.) It will be recalled that the Lucky Gravel mine,
according to appellant's fabulous figures, ran from
approximately $15 (R. p. 11) to $36 (R. p. 22) per
cubic yard. Among the other witnesses called was a
lookout for the Forest Service who had been located
about 14 miles East of Georgetown (which was re-
ferred to by Bost in his testimony, R. p. 121) for about
16 seasons. He had neither heard of a Cougar Canyon
or a Lucky Gravel mine. (R. p. 82.) Just one witness
testified that he had heard of a Cougar Canyon, al-
though he had never heard of a Lucky Gravel mine,
or of its alleged lessees. (R. pp. 85, 86.) This witness
was a lookout of the Forest Service who had resided
in ithe vicinity involved all of his life. (R. p. 87.)
It developed that his knowledge of Cougar Canyon
was limited to the fact that when he was a boy about
10 years old, and about 48 or 50 years before he was
called on to testify, he had heard of a canyon of
that name. It also developed from the witness that
one or two persons had also asked him about the

; whereabouts of a Cougar Canyon. No other evidence

I of the existence of the Canyon was offered. The
County Assessor of El Dorado County, who had held

; that office for 14 years and had resided in the County
for approximately 30 years, testified that not only

I had he never heard of Cougar Canyon or the Lucky

12

Gravel mine or of the lessees, but that, having charge
of the assessment rolls of the Comity he could testify
that there was no record of any assessment against
any Lucky Gravel claim or of any tax assessed against
any of the lessees named. (R. p. 89.) Similar testi-
mony in regard to his lack of knowledge in his 40
years' residence in that Comity, of Cougar Canyon
or of the Lucky Gravel mine or of the alleged lessees,
was given by the Comity Surveyor. (R. p. 90.)
Merchants and other businessmen were called with
the same result. Without summarizing further along
this line we believe that we may safely assume that
the proof was ample that the mine referred to as well
as the alleged lessees, never existed.

We now proceed to a consideration of the errors of
law alleged by appellants that have been committed
by the lower Court.

THE INDICTMENT IS SUFFICIENT.

Counsel at the outset jDoint out in their brief a
minor defect in the indictment. A similar defect was
referred to by this Court in the comparatively recent
case of Hills v. United States (97 Fed. (2d) 710).
That defect is in the charge in the opening sen-
tence of the indictment (R. p. 1) that the defend-
ant falsified "a material matter" instead of ''a ma-
terial fact". Counsel refer to the holding of this
Court in the Hills case that the discrepancy did exist.
Counsel fail, however, to give any weight to the
statement of this Court that the ''deficiencv", as it is

13

termed in the Court's opinion, would be cured were
it not for an omission in the indictment of another
allegation which the Court held did not appear. That
omission, it will be recalled, grew out of the failure to
charge that certain fictitious names that had been
supplied by an accessory had, in fact, been incor-
porated and used in the affidavits that had been ten-
dered to the Mint.

This latter defect as it w^as held to be, does not
exist in the instant case because there is no accessory
charged in this case. Hence the defect relied on by
counsel clearly has no substance.

Moreover, we submit that the so-called deficiency in
the reference to a falsification of a matter instead of
a fact does not exist in view of the language of the
whole indictment. The opening sentence in which the
discrepancy appears could have been entirely omitted
and the indictment would have been sufficient. But
even with the opening sentence included, the point we
submit is of no consequence in view of the fact that
the sentence refers to matters falsified by the appel-
lant "as hereinafter set forth". The defect, if it is
to be regarded as such, certainly could not have preju-
diced appellant within the requirement of Section
556 of Title 18, of the U. S. Code.

Appellant urges that 'Hhere is nowhere alleged
what the material fact is that induced the Treasury
Department to purchase the gold". (Br. p. 13.) We
.submit that there is no necessity that such an allega-
Ition appear. Section 80 of Title 18 at one time pro-
jvided that "Whosoever shall make or cause to be

14

made, or present or cause to be presented, for pay-
ment or approval * * * any claim upon or against the
Government of the United States * * * knowing such
claim to be false, fictitious or fraudulent; or whoever
for the purpose of obtaining or aiding to obtain the
payment or approval of Hitch claim, or for the purpose
and with the intent of cheating and swindling or de-
frauding the Government of the United States * * *
shall knowingly and wilfully falsify or conceal or
cover up by any trick, scheme, or device, any ma-
terial fact * * * " shall be punished as provided. How-
ever, when the section was revised in 1934 the lan-
guage italicized was omitted. Hence there was not
only no necessity of alleging that the misstatement of
the appellant had in fact induced the Treasury De-
partment to purchase the gold but no necessity of even
alleging that the falsification of the appellant was
with the intent of cheating, swindling or defrauding
the Government.

Coimsel for appellant further urge not only that
the indictment is ''vague and indefinite" but also
claim that "as a matter of fact the falsity of the affi-
davit itself is not alleged directly and positively as
required" by law\ (Br. pp. 14, 15.) We have diffi-
culty in following counsel in view of the language of
the indictment, which in our opinion is more complete
than was necessary. It will be recalled that the in-
dictment charges in Paragraph III of the First
Count:

"That on or about the 6th day of April, 1934,
said defendant requested of the Mint of the
United States, located at San Francisco, Call-

15

fornia, which was then and there an agency of the
Treasury Department of the United States, that
it purchase certain gold that was then and there
tendered by him to said Mint for sale; that for
the purpose of inducing said Mint to purchase
said gold, and in purported compliance with said
regulations above mentioned, said deposit of gold
was accompanied by an affidavit executed by
said defendant, a copy of which affidavit is here-
unto annexed, marked Exhibit ^A', and made a
part hereof; that in and by the terms of said
affidavit, said defendant wilfully, knowingly and
unlawfully, and contrary to his oath in said affi-
davit taken, declared, certified and swore to cer-
tain material matters which were not true and
which he did not believe to be true when he swore
to said affidavit, to-wit: That he was the owner
of a mining claim called the 'Lucky Gravel' claim,
and that the source of said gold so tendered and
deposited was 'Lucky Gravel claim, mostly small
nuggets', and that said gold had been recovered
from said claim, which claim it was stated in said
affidavit was located in Cougar Canyon, El
Dorado County, California, whereas in truth and
in fact as said defendant then and there well
knew, he was not the owner of any mining claim
in said County and State, known as or called the
Lucky Gravel claim, and whereas in truth and
in fact the source of said gold was not said
Lucky Gravel claim, and said gold had not been
recovered from said alleged claim, which facts
said defendant at all times well knew." (R. pp.
3-4.)

Similar allegations appear in the other counts in
:he indictment. Counsel state that the portion of the

16

paragraph reading "whereas in truth and in fact as
said defendant then and there well knew, he was not
the owner of any Lucky Gravel claim, and in truth
and in fact the source of the gold was not the Lucky
Gravel claim and the gold had not been recovered
therefrom", are "words of recital only and are not
positive and direct allegations of falsity". No au-
thorities are cited in support of this claim and, we
submit, for obvious reasons. Counsel do not suggest
how the allegation could have been made more directly
or more positively and we are at a loss to know even
with the assistance of counsel's comments how it could
have been made more positive or direct.

Appellant next urges that the counts in the indict-
ment are uncertain "in that they do not directly
allege that the gold which Bost deposited for sale with
the Mint was the class or type of gold which required
a filing of the affidavit in question", (Br. p. 17), nor
that the misrepresentations were material. (Br. p.
19.) No authorities are cited in support of this con-
tention. We submit that it is without merit. Sec-
tion 35 of the Regulations* provides that the Mints
are authorized to purchase certain kinds of gold. In-
cluded among the kinds specified is "gold recovered
from natural deposits in the United States or places
subject to the jurisdiction thereof, and which shall not
have entered into monetary or industrial use". Sec-
tion 38 of the Regulations provides that the Mints
shall not purchase gold under the clause just quoted
"unless the deposit of such gold is accompanied by

*Thi8 Court will of course take judicial notice of tlie Regulations referred
to, since they were authorized by Congress. (31 U. S. C. §442; Caha v. U.S.,
152 U. S. 211.)

17

a properly executed affidavit", on Form TG-19, which
must be filed with each delivery of gold by persons
who have recovered such gold by mining or panning
in the United States, with certain exceptions not here
relevant.

According to appellant's contention (Br. p. 18)
''it should have been definitely and positively alleged
in all ^Ye coiuits just what type or class of gold was
deposited with the Mint * * *"

We submit that it was not necessary to allege any
more than was alleged. Of course it is elementary
that Government regulations such as those involved
have the force and effect of law. (F. T. Dooley Lum-
ber Co. V. U. S., 63 Fed. (2d) 384, 386.) In the instant
case appellant represented that he was one of the
persons who came within one of the classifications
mentioned in the Regulations, and that the gold that
he offered for sale had been recovered by him by
mining or panning in the United States, and that
he had recovered the gold from a certain specified
mine during a certain specified period of time. These
sworn statements so made to the Government have
; been found by the jury to be false. Whether or not
the facts required to be specified w^ere material was
'for the executive branch of the Government to de-
termine. Since it did require those facts to be speci-
jfied, this Court must presume that its action in mak-
ling such a requirement was reasonable. The fact that
ithe Government did see fit to require such represen-
jtations in coimection with the sale of gold of the type
described is sufficient proof that the representations
[were material. Say counsel for appellant: "to plead

18

him (appellant) within Section 80 for having filed a
false affidavit with said gold, the Government had
to specifically plead facts to show that Mr. Bost de-
posited gold of the type requiring this particular
affidavit". (Br. p. 20.) According to this logic had
appellant imported gold from a foreign country and
then sold it to the Mint on the written representation
that the gold had been recovered by him by mining
or panning it from a mine located within the United
States, he could not have been successfully prosecuted
notwithstanding his conceded misrepresentation, be-
cause, according to appellant, it would have been
necessary for the Government to specifically plead
facts showing that Bost had sold it gold ''of the type
requiring this particular affidavit". Obviously this
could not have been done under the circumstances
and hence a prosecution could not have been success-
fully maintained. Such an argument is obviously
unsound.

Likewise, without substance is the contention (Br.
p. 20) that the indictment is defective in that it does
not allege "that the Federal Government ever pur-
chased the gold deposited by Mr. Bost or in any way
relied upon the affidavit filed by him, or that it was
misled thereby". No such requirement appears in the
law. The charge is not that the defendant secured
the purchase price of the gold by having made false
and fraudulent representations that were relied on by
the Government, but merely that he wilfully falsified
certain material facts in a matter within the jurisdic-
tion of a dei)ai'tnK'nt of tlie United States. So to do
is a violation of the statute involved.

19

THE MAPS OFFERED IN EVIDENCE WERE ADMISSIBLE.
It will be recalled that the Government o:ffered in
evidence as part of its case in chief, certain maps. One
of the maps (Government's Exhibit 2), was identified
by one H. C. Sedelmeyer, a Civil Engineer employed
in the United States Forest Service. He testified
that he had been engaged in that branch of the Gov-
ernment for 25 years. The map identified by him
bears the inscription:

U. S. Department of Agriculture

Forest Service

El Dorado National Forest

Cali f ornia-Ne vada

Mt. Diablo Meridian

I The witness testified that the map was an official
tmap of his department. He also testified that it was
(prepared from United States surveys, General Land
1 Office surveys and from the surveys of the Forest
Service, by one of the draftsmen in his office under
his own supervision. (R. p. 52.) The other maps re-
ferred to (Government's Exhibit 3) were the usual
'topographic maps in common use. They bore the
official inscription "Department of the Interior —
iU. S. Geological Survey". (R. p. 54.) They were
Identified by one H. D. McGlashan, Assistant Geo-
ogical Engineer in the employ of the United States.
iMr. McGlashan testified that he had been with the
Pnited States Geological Survey for 31 years. The
luaps in question, he stated, had been received from
|:he Washington office of the United States Geological
purvey and were the official maps used in that de-

20

partment. The maps were offered, as was explained,
for the purpose of showing that on none of them, not-
withstanding the detail with which they were pre-
pared, did Cougar Canyon apjjear, though many other
canyons and other topographic features were shown.

The law is well settled that such documents are ad-
missible in evidence. As this Court held in the case of
United States v. Romaine (255 Fed. 253) maps of
the United States Coast and Geodetic Survey ''should
be taken as absolutely establishing the truth of all
that they purport to show".

The maps constituting both Exliibits 2 and 3 are
admissible in evidence under a w'ell settled exception
to the hearsay rule. The particular exception has to
do with official records. Many types of official docu-
ments are admissible under it, including records,
registers, maps and miscellaneous documents. (See
Sheehmi v. Vedder, 108 Cal. App. 419, 425-6.) One
class of such records has been before the Court fre-
quently in recent years. Those records are reports of
physicians of the Veterans Bureau on examinations of
claimants for disability compensation. As was pointed
out by the Circuit Court of Appeals for the Fourth
Circuit in the case of

Long V. U. S., 59 F. (2d) 602,
they fall clearly within the principle under which
exceptions to the hearsay rule are admitted, namely:
necessity and circumstantial guaranty of trustworthi-
ness. Said the Court in that case:

''As to trustwoi-thiness, it is made by an official
of the government in the regular course of duty,

21

who presumably has no motive to state anything
but the truth, and it is made to be acted upon,
and is acted upon, in matters of importance by
officials of the government in the discharge of
their duties."

It was at one time believed that such official records
were not admissible miless there was a statute ex-
pressly requiring them to be kept. This rule is no
longer followed. As the Supreme Court of the United
States held in the case of

Sandy White v. U. S., 164 U. S. 100, 103,
in ruling that a record book kept by the jailer of a
public jail in Alabama was admissible :

"Whether such duty was enjoined upon him
by statute or by his superior officer in the per-
formance of his official duty is not material. So
long as he was discharging his public and official
duty in keeping the book, it was sufficient. The
nature of the office would seem to require it. In
that case the entries are competent evidence."

■The Third Circuit Court of Appeals held to the same

effect in the case of

Chesapeake S Delaware Canal Co. v. U. S.,
240 Fed. 903, 907,

'in holding that certain records kept by the United

•States Treasurer were admissible:

I *'We understand the general rule to be that when
a public officer is required, either by statute or the
nature of his dut}^, to keep records of trans-
actions occurring in the course of his public

I service, the records thus made, either by the

I officer himself or under his supervision, are ordi-

22

narily admissible, although the entries have not
been testified to by the person who actually made
them, and although he has therefore not been
offered for cross-examination. As such records
are usually kept by persons having no motive to
suppress or distort the truth or to manufacture
evidence, and, moreover, are made in the dis-
charge of a public duty, and almost always under
the sanction of an official oath, they form a well-
established exception to the rule excluding hear-
say, and, while not conclusive, are prima facie
evidence of relevant facts. The exception rests
in part on the presumption that a public officer
charged with a particular duty has performed it
properly. As the records concern public affairs,
and do not affect the private interest of the officer,
they are not tainted by the suspicion of private
advantage."

This Court has held to the same effect in

Greenhauw. v. U. S., 80 Fed. (2d) 113, 126.
In fact it is not required that the keeping of the books
or other records be essential to the conduct of the
office. It is sufficient if the keeping of such records
constitutes a convenience in connection with the con-
duct of such office.

''Any record required by law to be kept by
an officer, or which he keeps as necessary or con-
venient to the discharge of his official duty, is a
public record."

This statement was quoted with appi-oval in

People V. TomalUj, 14 Cal. App. 224, 231.

It is obvious that all of the reasons advanced by the
different Courts referred to above apply fully to the

23

question of the admissibility of the maps received in
evidence.

Of course the maps were not conclusive. It was
entirely competent for appellant to prove that a
Cougar Canyon did exist somewhere in the vicinity
where he claimed that the Lucky Gravel Mine was
to be found. However, appellant made no attempt,
except by his own unsupported testimony, to prove
the existence of a Cougar Canyon or a Lucky Gravel
Mine.

THE TESTIMONY OF AGENT LYNN REGARDING HIS
CONVERSATION WITH APPELLANT WAS ADMISSIBLE.

Counsel for appellant next urge (Brief p. 27)
that the Court erred in admitting the testimony of
R. C. Lynn of the Bureau of Internal Revenue in
regard to the conversation he had with appellant
prior to the latter 's arrest. The only objections urged
|in the lower Court (R. pp. 58, 60) were that 'Hhe
jcorpus delicti has not been proved ' \ This mere state-
pent of the point should be sufficient to dispose of it
without further argument. It is true that in con-
spiracy cases it has been held at times that a conversa-
rion between one of the alleged conspirators and a
i^overnment officer is inadmissible until a ''corpus
delicti" has been proved. However, the preferred
jioctrine today is that it is entirely within the discre-
jion of the lower Court whether it will allow evi-
lence of such conversations i)rior to the proof of the
jonspiracy. No similar requirement in either form

i

24

exists as a preliminary to the admission of proof of a
conversation with a defendant under the circum-
stances shown in this case.

THE TESTIMONY REGARDING THE SEARCHES MADE
AND THE ANSWERS TO INQUIRIES WAS ADMISSIBLE.

Apj)ellant's next contention (Brief p. 30) is that the
Court erred in allowing testimony to be given through
certain witnesses called by the government regarding
the result of the searches made for a Cougar Canyon
and a Lucky Gravel Mine. The objections interposed
to this line of testimony were that it was hearsay.
(R. pp. 65, 77 et seq.) This objection, like the one
interposed to the admissibility of the official maps
offered by the government, overlooks a settled excep-
tion to the hearsay rule under which answers to in-
quiries made regarding the whereabouts of a certain
person are admissible. This question was passed
upon by the Circuit Court of Appeals for the Fifth
Circuit in the case of

NicUU V. TL S., 48 F. (2d) 46.
In that case the defendant had been charged with
using the mails to defraud by procuring the issuance
of life insurance policies to fictitious persons. In order
to prove that the persons were fictitious, it w^as held
that testimony of persons living in the town where
an insured was claimed to live, such as the postmaster,
that they had never loiown of such a person there,
that his name was not in the city directory or in the
telephone books, and that on inquiry they could not
learn of him, was admissible. As the Court said,

1

25

"Had they been persons with no special op-
portunity to know the residents of Lakeland, and
had they made no mquiry for Smith, their not
knowing him would have proven nothing. But
the burden of showing that no such person had
lived in Lakeland could have been borne in no
other w^ay than by such proof as was offered.
While not a demonstration, it was some evidence
of the negative fact to be proved. ' '

The matter has also been passed upon by the Cali-
fornia Supreme Court in the case of

People V. Eppinger, 105 Cal. 36.

It appears that a defendant had been charged with
forgery in having made a fictitious instrument pur-
porting to be the check of a person who was claimed
[by the state to have no existence. To prove the non-
i existence of the maker, a city directory was offered
land received in evidence. It w^as held on appeal that
lit had been properly admitted. It was also held that
evidence of a police officer that he had made inquiries
regarding the alleged payee of the check without
success, was admissible. As the Court said:

"The character of the directory, and the extent

of the inquiries, might affect the weight but not

the competency, of the e^ddence."

Again in the case of

People V. Sanders, 114 Cal. 216,
•i defendant had been charged with the forgery of a
jlraft. The defendant testified to money having been
i)aid by one Eaiausch on account of the purchase price
l>f certain land that was involved in connection with

i

26

the alleged transaction. The prosecution claimed that
Knausch had no existence. The prosecution called the
sheriff of the county and proved by him that he had
made search and inquiry as to the existence and where-
abouts of the alleged Knausch. He testified, as the
Court's opinion states, (p. 234) that he had inquired
of Knausch from all the old citizens and at every
hotel, livery stable and railroad ticket office in Fresno
County; that he had carried on similar investigations
all over the state for over a year and during the
whole time he had never fomid a man who had ever
known or heard of John Knausch. The defendant
objected to the introduction of this evidence on the
ground that it was hearsay, (p. 219.) The Court
held that the evidence was admissible.

Nor is this doctrine merely a California one. In the
Michigan case of

People V. Sharp, 19 N. W. 168,
on trial on a charge of forgery, the government, in
order to prove that an alleged subscribing witness did
not exist, offered the testimony of the sheriff. Said
the Court;

"The sheriff's testimony of his inability to find
or hear of any such man as the one whose name
appeared as the second subscribing witness, was
properly received. There is no other way in
showing that a name is fictitious. The extent of
his search and opportunities would go to the
weight, but not to the competency, of his testi-
mony.''

This disposes of the arguments advanced by appel-
lant. We submit that the appeal is without merit

27

ind that the judgment of the lower Court should be
iffirmed.

Dated, San Francisco,
December 14, 1938.

Respectfully submitted,

Frank J. Hennessy,

United States Attorney,

Robert L. McWilliams,

Assistant United States Attorney,

Sydney P. Murman,

Assistant United States Attorney,

Attorneys for Appellee.

NO. 8809

7

Ctrcutt Court of Mpptali

Jfor tiie iBtintt Cirtutt.

JOE MAZUROSKY,

Appellant,
vs.

UNITED STATES OF AMERICA,

Appellee.

^tm^tvipt of Eecotti

Upon Appeal from the District Court of the
States for the District of Oregon.

United

PAUL P. O'BRIEN,

clerk:

PARKER PRINTING COMPANY, (

S48 SANSOME STREET. SAN FRANCISCC

>

No. 8809

Winittt ^tatti

Circuit Court of ^pptalsi

jfox tte i^intti CfrcuU.

JOE MAZUROSKY,

Appellant,
vs.

UNITED STATES OF AMERICA,

Appellee.

Cransicrjpt of l^ecorD

Upon Appeal from the District Court of the United
States for the District of Oregon.

PARKER PRINTING COMPANY. 545 SANSOME STREET, SAN FRANCISCO

INDEX

[Clerk's Note: When deemed likely to be of an important nature,
errors or doubtful matters appearing in the original certified record are
printed literally in italic: and. likewise, cancelled matter appearing in
the original certified record is printed and cancelled herein accordingly.
When possible, an omission from the text is indicated by printing in
italic the two words between which the omission seems to occur.]

Page

Assignments of Error 180

Bill of Exceptions 48

Exhibits for the Government :

1— Check dated October 29, 1934, in the
amount of $450.00 signed by Christian
M. Mershom 134

3— Check dated September 12, 1934 to
Clara E. Allen in the amount of
$500.00 signed by W. E. Grazzu 135

4— Check dated September 20, 1935 to
J. C. Adams in the amount of $500.00
signed by H. F. Belter 136

5 — Check dated December 6, 1935 to
J. C. Adams in the amount of $300.00
signed by E. C. Deiliera 137

7 — Check dated November 14, 1925 to
O. A, Plummer in the amount of
$500.00 signed by Henry Wagner 138

8 — Savings Deposit Slip of Joe Mazu-
rosky for the amount of $450.00 dated
October 30, 1934 138

ii Joe Mazuroshy vs.

Index Page

Exhibits for the Government (Cont.) :
9 — Record of the Bank of California,
Portland, concerning a cheek in the
amount of $500.00 signed by H. F.
Belter 140

11— Check dated September 28, 1935 to
The Bank of California, Portland, in
the amount of $499.50 signed by J. D.
Bliss, Cashier 143

15 — Receipt for $587.50 dated September
23, 1934 to Miss Clara E. Allen signed
by J. J. Carson 143

26 — Check dated December 6, 1935 to
J. C. Adams in the amount of $300.00
signed by E. C. Deibert _ 144

27 — Savings deposit slip of Joe Mazu-
rosky for the amount of $500.00 dated
September 20, 1935 145

28 — Savings deposit slip of Joe Mazu-
rosky for the amount of $300.00 dated
December 6, 1935 145

29 — Savings withdrawal slip of Joe Ma-
zurosky for the amount of $500.00
dated September 20, 1935 146

30 — Duplicate collection receipt for the
amount of $500.00 dated September
25, 1934 147

United States of America iii

Index Page

Exhibits for the Government (Gont.) :
31 — Gollection department check dated
September 27, 1934 to Joe Mazurosky
in the amount of $498.60 signed by
T. F. Dunn, Cashier 148

32 — Western Union Money Order Mes-
sage dated July 7, 1936 149

33 — Western Union Money Order Record
dated July 7, 1936 150

34 — Western Union Money Order Mes-
sage dated October 20, 1934 151

Witnesses for the Government:
Allen, Miss Clara E.

— direct 101

Allen, Donald G.

—direct 107

— cross Ill

— redirect 112

— cross 113

Belter, H. F.

— direct 65

Belter, Mrs. H. F.

— direct 67

Bliss, J. L.

— direct 115

— cross 117

hr Joe Mcuznrosky vs.

Index Page

Witnesses for the Government (Cont.) :
Deibert, Ernest C.

— direct 75

Dubois, Lloyd

—direct 83

— cross 85

Eichenberger, Albert

— direct 106

Geenty, Robert C.

—direct 118

— cross 120

— redirect 121

Goltz, John

— direct 73

— cross 74

Goldman, Robert E.

— direct 114

— cross 115

— redirect 115

Gray, John M.

— direct 86

— cross 95

— r edi r ect 98

Horack, Mr. Herman H.

—direct 103

— cross 104

— redirect 105

United States of America v

Index Page

Witnesses for the Government (Cont.) :
Keller, Frank L.

—direct 129

— cross 130

— redirect 131

Manciet, L. D.

— direct 81

Mershon, Mrs. Christine

— direct 99

Munley, E. F.

— direct 107

Nelson, Frank

— direct 49

— cross 61

— redirect 65

Powell, O. A.

— direct 77

Thorsen, A., C.

—direct 131

Wagner, Henry

—direct 68

— cross 71

— recalled, direct 83

— cross 83

Wagner, William

— direct 72

vi Joe Mo'Surosky vs.

Index Page

Witnesses for the Government (Cont.) :
Welter, C. B.

— direct 48

— ^recalled, direct 132

— cross 133

— redirect 133

Williams, W. E.

— direct 79

— cross 80

Certificate to Transcript of Record on Appeal... 47

Indictment 4

Judgment and Sentence 41

Notice of Appeal 1

Order Extending Time to File Bill of Excep-
tions 43

Praecipe for Transcript of Record on Appeal... 46

Record of Arraignment and Plea of Not Guilty 36

Record of Trial and Motion for Directed Ver-
dict 36

Record of Trial, Order on Motion for Directed
Verdict, and Record of Verdicts 37

Stipulation for Transcript of Record on Appeal 44

Verdict of Guilty 40

NAMES AND ADDRESSES OF THE
ATTORNEYS OF RECORD
EDWIN D. HICKS,
515 Pacific Building,
Portland, Oregon,

for the Appellant
CARL C. DONAUOH,

United States Attorney,
J. MASON DILLARD and
MANLEY B. STRAYER,

Assistant United States Attorneys
for the Appellee.

I In the District Court of the United States
I for the District of Oregon

I No. C-15297

'united states of AMERICA,

vs.
JOE MAZUROSKY,

Defendant.

NOTICE OF APPEAL

Name and address of appellant: Joe Mazurosky,
i02 N. W. 6th St., Portland, Oregon.

Name and address of appellant's attorney: Ed-
ivin D. Hicks, 515 Pacific Bldg., Portland, Oregon.

2 Joe Ma^urosky vs.

Offense : Crime of unlawfully using United States
mails in fui-therance of a scheme to defraud, as
charged in Count 4 of the indictment; unlawfully
conspiring to use the United States mails in fur-
therance of a scheme to defraud, as charged in
Count 7 of the indictment, and unlawfully con-
spiring to use the United States mails in further-
ance of a scheme to defraud, as charged in Count 8
of the indictment.
Date of Judgment : March 19th, 1938.
Brief Description of Judgment, or Sentence:
A fine of $1,000 and imprisomnent in a Fed-
eral penitentiar}^ for 5 years, and from and
after the expiration of said term until said
fine be paid, for the offense charged in Count
4 of the indictment ; a fine in the sum of $5,000
and imprisonment for 2 years in a Federal
penitentiary, and from and after the expiration
of said term until said fine be paid, on Count
7 of the indictment ; a fine in the smn of $5,000
and imprisonment for 2 years in a Federal peni-
tentiary, and from and after the expiration of
said term until said fine be paid, on Comit 8
of the indictment; Counts 7 and 8 to rmi con-
currently and to begin to run after termination
of sentence imposed for the offense charged in
Count 4 of the indictment, making a total sen-
tence of $11,000 and 7 years imprisonment.

Name of prison where now confined if not on
bail; Multnomah County Jail, Multnomah County
Court House, Portland, Oregon.

United States of Amerioa 3

I, the above named appellant, hereby appeal to
the United States Circuit Court of Appeals for the
9th Circuit from the judgment above mentioned,
on the grounds set forth below.

JOE MAZUROSKY

Appellant
EDWIN D. HICKS

Attorney for Appellant

Dated: March 24th, 1938. [1*]

Grounds of Appeal :

1. Error in overruling and denying defendant's
Motion for a directed verdict as to Counts 4, 7 and
8 of the indictment.

2. Error in admitting testimony of transactions
not pleaded in the indictment and occurring 9
years before the first offense set forth in the indict-
ment.

3. Error in admitting declarations of one Roy
Martin to prove an alleged conspiracy between the
defendant and the said Roy Martin.

4. Error in the form and substance of the sen-
tence imposed.

State of Oregon,

County of Multnomah — ss.

Due service of the within Notice of Appeal is
hereb}^ accepted in Multnomah County, Oregon,
this 24th day of March, 1938, by receiving a copy

! 'Page numbering appearing at the foot of page of original certified
[Transcript of Record.

4 Joe Maziirosky vs.

thereof, duly certified to as such by Edwin D. Hicks,
of Attorneys for Defendant and Appellant.

CARL C. DONAUGH

United States Attorney for
the District of Oregon
By J. MASON DILLARD
Deputy.

[Endorsed]: Filed Mar. 24. 1938. [2]

In the District Court of the United States for the
District of Oregon.

November Term, 1937

Be it remembered, that on the 8th day of Febru-
ary, 1938, there was duly filed in the District Coui^
of the United States for the District of Oregon, an
Indictment in words and figures as follows, to wit:

pi

[Title of District Court and Cause.]

INDICTMENT FOR VIOLATION

of Sections 338 and 88, Title 18, U. S. C. A.

United States of America,
District of Oregon — ss.

The Grand Jurors of the United States of America
for the District of Oregon, duly impaneled, sworn
and charged to inquire mtliin and for said District,
upon their oaths and affirmations do find, charge,
allege and present:

That on the 27th day of October, 1937, the Grand
Jury of the United States for the District of Ore-
gon returned an indictment herein, No. C-15202,

United States of America 5

which said indictment was, on February 2, 1938, by
order of the above-entitled court resubmitted to said
Grand Jury; that this indictment is returned in
lieu of and replaces said original indictment and
j Count One hereof charges the identical offense
I charged in Count One of said original indictment,
and Counts Seven and Eight replace Count Five of
said original indictment and charge offenses iden-
tical with and included within said Count Five.

And the Grand Jurors aforesaid further find,
charge, allege and present:
' Count One:

That Joe Mazurosky, the defendant above-named,
prior to September 12, 1934, the exact date being
to the Grand Jurors unknown, acting jointly with
Roy L. Martin, alias Dr. Miles, alias O. C. Stone;
j Herbert C. Crangle, alias Dr. Avery ; John M. Gray,
j alias Dr. Pierce, alias H. J. Pierce, and Thomas A.
Andrews, alias Judge Thomas, together with other
persons to the Grand Jurors unknown, did devise a
; certain artifice -and scheme to defraud and, by
'means of false and fraudulent pretenses, repre-
sentations and promises, to obtain money and prop-
erty from a certain class of persons, including one
I Christine M. Mershon, then resident in divers com-
Imunities within [4] the United States, who, by
reason of age or infirmities and a lack of knowledge
and experience concerning medical and surgical
practice, could be induced to give credulity to the
jfalse representations hereinafter more particularly
described; that said scheme and artifice and pre-

6 Joe Mazurosky vs.

tenses, representations and promises then and there
were to be and were in substance as follows, that
is to say:

It was a paii: of said scheme and artifice that
the said Roy L. Martin, alias Dr. Miles, alias O. C.
Stone, and the said Herbert C. Crangle, alias Dr.
Avery, should call at the respective homes of each
of said intended victims, where the said Herbert
C. Crangle should represent himself as a noted eye
specialist and that his name was Dr. Avery, and
that he should make an examination of the eyes of i
the said intended victim and should then represent i
to him that he had a growth in one of his eyes and
that he would call into the home of the said in-
tended victim a Dr. Miles, who accompanied him;
that the said Roy L. Martin, alias Dr. Miles, alias
O. C. Stone, should thereupon enter the home of
the said intended victim and should represent him-
self to be Dr. Miles, a noted eye specialist, and
should thereupon examine the eyes of the said in- !
tended victim and inform him that there was a
growth on the nerve between one of his eyes and
his brain, and that unless it was removed imme-
diately he would lose his eyesight and his brain
would be affected ; that the said Herbert C. Crangle,
alias Dr. Avery, and the said Roy L. Martin, alias
Dr. Miles, alias O. C. Stone, would represent to
the said intended victim that the said Roy L. Mar-
tin, alias Dr. Miles, alias O. C. Stone, was compe-
tent to perform said operation and that they would
return in a few days and perform said operation;

I United States of America 7

that the said Roy L. Martin, alias Dr. Miles, alias
0. C. Stone, together with the said Herbert C.
! Crangie, alias Dr. Avery, would later return to
) the home of the said intended victim and at said
time should then pretend to perform an operation
on one of the eyes of the said intended ^dctim and
' should pretend to remove from the said eye a thin
' substance, which they should represent to the said
intended victim to be a growth, and should obtain
' from the said intended victim as payment for said
pretended operation large sums of money -, [5]
I That it was further a part of said scheme and
artifice that thereafter the said John M. Gray, alias
Dr. Pierce, alias H. J. Pierce, together with the
said Thomas A. Andrews, alias Judge Thomas,
would go to the home of the said intended victim,
where the said John M. Gray, alias Dr. Pierce,
alias H. J. Pierce, would represent himself to the
!said intended victim to be an eye specialist; that
ihe would then represent to him that he had been
sent there by Dr. Avery to make an examination of
his eye to determine whether the operation pre-
viously performed had been successful; that the
said John M. Gray, alias Dr. Pierce, alias H. J.
'Pierce, would then pretend to make an examina-
tion of the said eye and would inform the said
iintended ^dctim that the growth had not been en-
tirely removed and would return unless further
treated; that there was only one treatment for
such a condition, which was by means of a so-
called radium belt; that said radiimi belts were so

8 Joe Mazurosky vs.

valuable that it was necessary to make a deposit
to guarantee the return of the belt, and that when
it was returned the deposit would be refunded,
minus $1.00 a day rental for the time it had been
used ; that the said John M. Gray, alias Dr. Pierce,
alias H. J. Pierce, w^ould then represent to the
said intended victim that he could secure such a
radium belt for him from Judge Thomas ; that the
said Thomas A. Andrews, alias Judge Thomas,
would thereupon enter the home of the said in-
tended victim and would represent to him that his
name was Judge Thomas; that he was attorney
for Dr. Avery; that his daughter had one of said
radiiun belts and that he would send it to him with-
in a few days; that the said John M. Gray, alias
Dr. Pierce, alias H. J. Pierce, and Thomas A. An-
drews, alias Judge Thomas, would thereupon repre-
sent to the said intended victim that he must pay
them a large siuii of money as a deposit for said
belt, and that they should then and there obtain a
check in such amomit by then and there represent-
ing to him that said radium belt would be sent to
him within a few days;

That the said pretenses, representations and
promises, as the said defendant and the said Roy
L. Martin, alias Dr. Miles, alias O. C. Stone; Her-
bert C. Crangle, alias Dr. Avery; John M. Gray,
alias Dr. Pierce, alias H. J. Pierce, and Thomas A.
Andrews, alias Judge [6] Thomas, and each of
them, when so devising said scheme and artifice and
when so executing and attempting to execute the
same, well knew and intended, and at the time of

United States of America 9

the committing by them of the offense in this comit
charged did well know and intend, w^ere and would
be false and fraudulent pretenses, representations
; and promises, in this : That the true name of the
said Roy L. Martin was not Dr. Miles and he was
, not a noted eye specialist ; that the true name of
the said Herbert C. Crangle was not Dr. Avery
and that he was not a noted eye specialist ; that
the said intended victim would not at any time
have a growth upon one of his eyes ; that the exam-
ination of his eyes by the said Roy L. Martin, alias
I Dr. Miles, alias O. C. Stone, and Herbert C.
j Crangle, alias Dr. Avery, would not disclose a
1 growth upon one of said eyes and that they were
not competent to remove any such growth; that the
[thin substance which the said Roy L. Martin, alias
Dr. Miles, alias 0. C. Stone, should pretend to
remove from the eye of the said intended victim
j would not be and was not a growth and would not
I be removed from one of her eyes, but would be,
land was in fact, a thin piece of material which the
said Roy L. Martin, alias Dr. Miles, alias O. C.
Stone, would during said pretended operation
secretly place upon said eye; that the true name of
ithe said John M. Gray, alias Dr. Pierce, alias
IH. J. Pierce, was not Dr. Pierce nor Dr. H. J.
jPierce; that the said intended victim would not be,
at the time of the pretended examination by the
said John M. Gray, alias Dr. Pierce, alias H. J.
pierce, suffering from any abnormal condition of
jthe eye and would not require any treatment there-

10 Joe Ma^uroshy vs.

for; that there was not and is not in existence any
such apparatus known as a radium belt, designed
for treatment of the human eye; that the true
name of the said Thomas A. Andrews was not
Judge Thomas; that he was not an attorney, and
that his daughter did not have one of said radium
belts; that the said check to be obtained from the
said intended victim would not be used as a de-
posit for the safe return of any such radium belt,
but would be cashed [7] by the defendant, Joe
Mazurosky, and the proceeds thereof would be con-
verted to the own use of the defendant and the
said John M. Gray, alias Dr. Pierce, alias H. J.
Pierce, and Thomas A. Andrews, alias Judge
Thomas.

It was further a part of said scheme and artifice
of defendant and the said Roy L. Martin, alias Dr.
Miles, alias O. C. Stone; Herbert C. Crangle, alias
Dr. Avery; John M. Gray, alias Dr. Pierce, alias
H. J. Pierce, and Thomas A. Andrews, alias Judge
Thomas, that they should, by means aforesaid and
by the pretenses, representations and promises
aforesaid, to be made to the said intended victims,
to obtain from each of them money and valuable
property as aforesaid, which money and property
they would, according to said scheme and artifice,
unlawfully convert to their own use and benefit,
and to the use and benefit of each of them, and
Avould thereby defraud the said intended victims
and each thereof.

United States of America 11

That thereafter, and on or about the 30th day of
October, 1934, the exact date being to the Grand
Jurors unkno^sTi, the said false and fraudulent pre-
tenses, representations and promises having been
made to the said (^hristine M. Mershon, and the de-
fendant and the said John M. Gray, alias Dr.
Pierce, alias H. J. Pierce, and Thomas A. Andrews,
alias Judge Thomas, having secured from the said
Christine M. Mershon, by means of said false and
fraudulent promises and representations, a check
in the sum of $450, and while said scheme and arti-
fice was still in effect, the said defendant, Joe Mazu-
rosky, for the purpose of executing said scheme
and artifice to defraud and to obtain money and
property from the said Christine M. Mershon, did,
at Portland, in the State and District of Oregon,
and within the jurisdiction of this Court, unlaw-
fully, knowingly, wilfully and feloniously place and
cause to be placed in the United States Post Office
at Portland, Oregon, to be sent and delivered by the
Post Office Establishment of the United States, ac-
cording to the address and direction thereon, a [8]
letter enclosed in a post-paid envelope, addressed
to the Federal Reserve Bank at Seattle, Washing-
ton, from the Federal Reserve Bank at Portland,
Oregon, a further description of said letter being to
the Grand Jurors miknown, but said letter contain-
ing a check which was in words and figures as fol-
lows, to-wit:

12

Joe Mazurosky vs.

''Oct 29 1934
Arlington State Bank

No.

Write Name of Your Bank (City and State) On

This Line
Arlington Wash

Pay to the Order of H. J. Pierce $450.00

Four hundred Fifty & no/100 Dollars

For value received I claim that the above amount
is on deposit in said bank in my name subject to this
check and is hereby assigned to payee or holder
hereof.

CHRISTINE M. MERSHON

Address "

John Willy
Chicago Form 158
Stamps on Face
"92" (In Circle)
''Savings Teller No. 2
Oct
30
1934
24-6"
(In Circle)

(Reverse Side)

"H. J. Pierce

O. C. Stone
Joe Mazurosky"
(Stamps)
"Pay to the Order of Any Bank, Banker or Trust
Co. All Prior Endorsements Guaranteed. 24-6.

"N. P.
24-6"
(In Square)

United States of America 13

Oct 30 1934. The Bank of California, N. A., Port-
land, Oregon."

*'Pay to the order of any Bank or Banker or
through the Portland Clearing House. All Prior
Endorsements Guaranteed. Oct 30 1934. 24-1 Port-
land Branch 24-1. Federal Reserve Bank of San
Francisco."

Contrary to the forai of the statute in such case
made and pro^dded and against the peace and dig-
nity of the United States of America. [9]

And the Grand Jurors aforesaid, upon their oaths
and affirmations aforesaid, do further find, charge,
allege, and present :

Count Two:

That Joe Mazurosky, the defendant above-named,
prior to September 12, 1935, the exact date being
to the Grand Jurors unknown, acting jointly with
Frank Faircloth, alias Dr. Pierce, and William H.
Londergan, Jr., alias J. C. Adams, together with
other persons to the Grand Jurors unknown, did de-
vise a certain artifice and scheme to defraud and, by
means of false and fraudulent pretenses, represen-
tations and promises, to obtain money and prop-
erty from a certain class of persons, including H. F.
Belter, then residents in divers communities within
the United States, who, by reason of age or infirmi-
ties and a lack of knowledge and experience concern-
ing medical and surgical practice, could be induced
to give credulity to the false representations here-
inafter more particularly described; that said
scheme and artifice and pretenses, representations

14 Joe Mazurosky vs.

and promises then and there were to be and were
in substance as follows, that is to say:

It was a part of said scheme and artifice of the
said defendant and the said Frank Fairch)th, alias
Dr. Pierce, and William H. Londergan, Jr., alias
J. C. Adams, that the said Frank Fairclotli, alias
Dr. Pierce, and William H. Londergan, Jr., alias
J. C. Adams, would call at the respective homes of
each of said intended victims, at which time one of
said persons would represent himself to the said
intended victims to be a representative of a spec-
tacle company and would represent the other of
said persons to be an eye specialist ; that they would
pretend to examine the eyes of the said intended
victim and would represent to him that he had a
cataract over one of his eyes; that they would rep-
resent to the said intended victim that the only
remedy was a radium treatment, which cost about
$75.00 a drop, and that the said Dr. Pierce was com-
petent to perform an operation to remove said
cataract; that the said person representing himself
to be Dr. [10] Pierce would then pretend to perform
an operation upon one of the eyes of the said in-
tended victim and would pretend to remove there-
from a small piece of material, which they would
represent to be a cataract; that they would tliere-
upon charge and obtain from the said intended vic-
tim large sums of money in payment for said opera-
tion, which were, according to the said scheme and
artifice of defendant and the said Frank Faircloth,
alias Dr. Pierce, and William H. Londergan, Jr.,
alias J. CI Adams, to be unlawfully converted by

United States of America 15

them to their own use and the use of each of them;
That the said pretenses, representations and
promises, as the said defendant and the said Frank
Faircloth, alias Dr. Pierce, and William H. Londer-
gan, Jr., alias J. C. Adams, and each of them, when
so devising said scheme and artifice and when so
executing and attempting to execute the same, well
knew and intended, and at the time of the commit-
ting by them of the offense in this count charged,
did well know and intend, were and would be false
and fraudulent pretenses, representations and
promises, in this : That neither the said Frank Fair-
cloth, alias Dv. Pierce, nor the said William H.
Londergan, Jr., alias J. C. Adams, was a represen-
tative of a spectacle company, nor was either of said
persons an eye specialist; that said intended victim
would not have a cataract over one of his eyes ; that
the said Dr. Pierce was not competent to perform
an operation to remove such cataract ; that the said
person representing himself to be Dr. Pierce would
not remove a cataract from the eye of the said in-
tended victim, and that the small piece of material
which the said person representing himself to be
, Dr. Pierce would pretend to remove from said eye
of said intended victim would not be and was not
a cataract and would not be removed from one of
Ibis eyes, but would be, and was in fact, a thin piece
of material which the said person representing him-
Iself to be Dr. Pierce would during said pretended
J operation secretly place upon said eye. [11]
I It was further a part of said scheme and artifice
I of defendant and the said Frank Faircloth, alias

16 Joe Mazuroslxy vs.

Dr. Pierce, and William H. Londergan, Jr., that
they should, by means aforesaid, and by the pro-
tenses, representations and promises aforesaid, to
be made to the said intended victims, obtain from
them money and valuable propeii:y as aforesaid,
which money and property they would, according
to said scheme and artifice, unlawfully convert to
their own use and benefit, and to the use and bene-
fit of each of them, and would thereby defraud the
said intended victims.

That thereafter, and on or about the 20th day of
September, 1935, the exact date being to the Grand
Jurors unknown, the said false and fraudulent pre-
tenses, representations and i^romises having been
made to the said H. F. Belter, and the defendant
and the said Frank Faircloth, alias Dr. Pierce, and
William H. Londergan, Jr., having secured from
the said H. F. Belter, by means of said false and
fraudulent promises and representations, a check in
the sum of $500, and while said scheme and artifice
was still in effect, the said defendant, Joe Mazu-
rosky, for the purpose of executing said scheme and
artifice to defraud and to obtain money and prop-
erty from the said H. F. Belter, did, at Portland, in
the State and District of Oregon, and within the
jurisdiction of this Court, unlawfully, knowingly,
wilfully and feloniously place and cause to Ije placed
in the United States Post Office at Portland, Ore-
gon, to be sent and delivered by the Post Office
Establishment of the United States according to the
address and direction thereon, a letter enclosed in a
postpaid envelope, addressed to the Federal Reserve

United States of America 17

Bank at Spokane, Washington, from the Federal
Reserve Bank at Portland, Oregon, a further
description of said letter being to the Grand Jurors
unknown, but which said letter contained a check
which was in words and figures as follows, to-wit:

[12]

(Picture) *'The First National Bank 98-147

Kennewick, Wash. Sept 20 1935
Pay to the

Order of J. C. Adams $500.00

Five Hundred and no/100 Dollars

No. 345 H. F. BELTER

Safe
Deposit Boxes

For

Rent
(In Diamond)

(Stamps) *'N. P.

''92" (In Circle) 24-6" (In Square)

(Reverse Side)

'*J. C. Adams

Joe Mazurosky"

(Stamps)

''Pay to the Order of Any Bank, Banker or Trust
Co. Prior Indorsements Ouaranteed. 24-6 Sep 20
1935 24-6. The Bank of California, N. A., Port-
land, Oregon".

18 Joe Maeurosky vs,

"* * any Bank or Banker or * * the Portland
Clearing House. All Prior Endorsements Guar-
anteed. Sep 20 1935. 24-1 Portland Branch 24-1
Federal Reserve Bank of San Francisco".

Contrary to the form of the statute in such case
made and provided and against the peace and dig-
nity of the United States of America. [13]

And the Grand Jurors aforesaid, upon their oaths
and affirmations aforesaid, do further find, charge,
allege and present:

Count Three:

That Joe Mazurosky, the defendant above-named,
prior to September 12, 1935, the exact date being
to the Grand Jurors unkno\Nii, acting jointly with
Frank Faircloth, alias Dr. Pierce, and William H.
Londergan, Jr., alias J. C. Adams, together with
other persons to the Grand Jurors unkno^^^l, did
devise a certain artifice and scheme to defraud and,
b}' means of false and fraudulent pretenses, repre-
sentations and promises, to obtain money and prop-
erty from a certain class of persons, including one
H. F. Belter, then resident in divers communitie-«
within the United States, who, by reason of age or
infirmities and a lack of knowledge and experience
concerning medical and surgical practice, could be
induced to give credulity to the false representations
herein described; that said scheme and artifice and
pretenses, representations and promises wTre iden-
tical mth those described in Count Two of this in-
dictment and the allegations of Count Two descrip-
tive of said scheme and artifice and pretenses, rep-

United States of America 19

resentations and promises, and the falsity thereof,
are hereby referred to and by reference incorpor-
ated herein as if here repeated;

That thereafter, and on or about the day of

September, 1935, the exact date being to the Grand
Jurors unknown, the said false and fraudulent pre-
tenses, representations and promises having })een
made to the said H. F. Belter, and the defendant
and the said Frank Faircloth, alias Dr. Pierce, and
William H. Londergan, Jr., having secured from
the said H. F. Belter, by means of said false and
fraudulent promises and representations the said
check in the sum of $500 mentioned in said Count
Two of this indictment, and while said scheme and
artifice was still in effect, the said defendant, Joe
Mazurosky, for the purpose of executing said
scheme and artifice to defraud and to obtain money
and property from the said H. F. Belter, [14] did,
at Portland, in the State and District of Oregon,
and within the jurisdiction of this Court, unlaw-
fully, knowingly, wilfully and feloniously place and
cause to be placed in the United States Post Office
at Portland, Oregon, to be sent and delivered by
the Post Office Establishment of the United States
according to the address and direction thereon, a
letter enclosed in a postpaid envelope, addressed to
I the First National Bank at Kennewick, Washing-
! ton, from the Bank of California, N. A., of Port-
land, Oregon, a further description of said letter
being to the Grand Jurors unknown, but which said
letter contained a check which w^as in words and
figures as follows, to- wit :

20 Joe Maznrosky vs.

^'(Picture)" ''The First National Bank 98-147
Kennewick, Wash. Sept 20 1935
Pay to the Order of J C Adams $500 00

Five Hundred and no/100 Dollars

H F BELTER"
No. 345 (In Diamond)
Safe Deposit
Boxes for Rent

(Stamps) "92" (In Circle)

"Please Report By This (In Square)
No. 68646

The Bank of California
National Association
Portland, Ore."
"N P (In Square)
24-6"

(Reverse Side)
"Pay to the Order of any Bank Banker or Trust
Co
Prior indorsements guaranteed

24-6 Sep 20 1935 24-6
The Bank of California, N. A.
Portland, Oregon"
a* * * ^^y Bank or Banker or
* * * the Portland Clearing House
All prior endorsements guaranteed
Sep 20 1935
24-1 Portland Branch 24-1

Federal Reserve Bank of San Francisco"

United States' of America 21

**Pay to the Order of any Bank or Banker or
through the Spokane Clearing House
All prior endorsements guaranteed
Sep 21 1935
28-1 Spokane Branch 28-1
Federal Reserve Bank of San Francisco"

"Cancelled
Spokane Branch
Sep 24, 1935
Federal Reserve Bank"

"Cancelled
Spokane Branch
Sep 24, 1935
Federal Reserve Bank" [15]

"Cancelled

Federal Reserve Bank
Sep 25, 1935
Portland Branch"

"Pay any Bank or Banker
All previous endorsements guaranteed
24-6 Sep 27 1935 24-6
The Bank of California, N. A.
Portland, Oregon"

Contrary to the form of the statute in such case
made and provided and against the peace and dig-
nity of the United States of America. [16]

And the Grand Jurors aforesaid, upon their
oaths and affirmations aforesaid, do further find,
charge, allege and present:

22 Joe Mazurosky vs.

Court Four:

That Joe Mazurosky, the defendant above-named,
prior to September 12, 1935, the exact date being
to the Grand Jurors unknown, acting jointly with
Frank Faircloth, alias Dr. Pierce, and William H.
Londergan, Jr., alias J. C. Adams, together with
other persons to the Grand Jurors unknown, did
devise a certain artifice and scheme to defraud
and, by means of false and fraudulent pretenses,
representations and promises, to obtain money and
property from a certain class of persons, including
one H. F. Belter, then resident in divers commu-
nities within the United States, who, by reason of
age or infirmities and a lack of knowledge and
experience concerning medical and surgical prac-
tice, could be induced to give credulity to the false
representations herein described; that said scheme
and artifice and pretenses, representations and
promises were identical with those described in
Count Two of this indictment and the allegations
of Count Two descriptive of said scheme and arti-
fice and pretenses, representations and promises,
and the falsity thereof, are hereby referred to and
by reference incorporated herein as if here repeated ;

That thereafter»i^, and on or about the 28th day
of September, 1935, the exact date being to the
Grand Jurors unknown, the said false and fraudu-
lent pretenses, representations and promises having
be(ai made to the said II. F. Belter, and the defend-
ant and the said Frank Faircloth, alias Dr. Pierce,
and William H. Londergan, Jr., having secured
from the said H. F. Belter, by means of said false '
and fraudulent promises and representations the

United States of America 23

said check in the sum of $500 mentioned in said
Comit Two of this indictment, and while said scheme
and artifice was still in effect, the said defendant,
Joe Mazurosky, for the purpose of executing said
scheme and artifice to defraud and to obtain money
and property from the said H. F. Belter, [17] did
unlawfully, knowingly, wilfully and feloniously
place and cause to be placed in the United States
Post Office at Kennewick, Washington, and sent
and delivered to the addressee thereof by the Post
Office Establishment of the United States, accord-
ing to the address and direction thereon, a letter
enclosed in a postpaid envelope, addressed to the
Bank of California, N. A., at Portland, in the
State and District of Oregon, from The First
National Bank, Kennewick, Washington, a further
description of said letter being to the Grand Jurors
unknown, but which said letter contained a bank
draft which was in words and figxires as follows,
to-wit :

''(Picture)" The First National Bank 98-147 12
Kennewick, Wash., Sep 28 1935 193

No. 40246
Pay to the Order of The Bank of California,
N. A., Portland, Oregon $499.50
First Nat'l

Kennewick $499 and 50 cts

To The First National Bank

24-4 Portland, Oregon

Insured against fraudulent alteration
Todd Bankers Supply

JAY D BLISS

Cashier"

24 Joe Ma^urosky vs.

(Reverse Side)
(Stamps)

''Received Payment Thru Clearing House

24-6

Sep 30 1935

Portland

Oregon

The Bank of California, N. A."

''Received Payment Thru Clearing House

24-6

Sep 30 1935

Portland

Oregon

The Bank of California, N. A."

"Collection
Sep 30 1935
Department" [18]

Contraiy to the form of the statute in such case
made and provided and against the peace and dig-
nity of the United States of America. [19]

And the Grand Jurors aforesaid, upon their
oaths and affirmations aforesaid, do further find,
charge, allege and present :

Count Five:

That Joe Mazurosky, the defendant above-named,
prior to September 12, 1935, the exact date being
to the Grand Jurors miknown, acting jointly with
Frank Faircloth, alias Dr. Pierce, and William H.
Londergan, Jr., alias J. C. Adams, together with
other persons to the Grand Jurors miknown, did

United States of America 25

devise a certain artifice and scheme to defraud and,
by means of false and fraudulent pretenses, repre-
sentations and promises, to obtain money and prop-
erty from a certain class of persons, including one
E. C. Deibert, then resident in divers communities
within the United States, who, by reason of age
or infirmities and a lack of knowledge and experi-
ence concerning medical and surgical practice, could
be induced to give credulity to the false representa-
tions herein described; that said scheme and artifice
and pretenses, representations and promises were
identical with those described in Count Two of
this indictment and the allegations of Count Two
descriptive of said scheme and artifice and pre-
tenses, representataions and promises, and the
falsity thereof, are hereby referred to and by refer-
ence incorporated herein as if here repeated;

That thereafter, and on or about the 7th day of
December, 1935, the exact date being to the Grand
Jurors unknown, the said false and fraudulent pre-
tenses, representations and promises having been
made to the said E. C. Deibert, and the defendant
and the said Frank Faircloth, alias Dr. Pierce,
and William H. Londergan, Jr., having secured
I from the said E. C. Deibert, by means of said false
! and fraudulent promises and representations a check
[in the sum of $300.00, and while said scheme and
i artifice was still in effect, the said defendant, Joe
Mazurosky, for the purpose of executing said scheme
and artifice to defraud and to obtain money and
property from the said E. C. Deibert, did, at Port-

26 Joe Maznrosky vs.

land, [20] in the State and District of Oregon, and
within the jurisdiction of this Court, unlawfully,
knowingly, wilfully and feloniously place and cause
to be placed in the United States Post Office at Port-
land, Oregon, to be sent and delivered by the Post
Office Establishment of the United States accord-
ing to the address and direction thereon, a letter
enclosed in a postpaid envelope, addressed to the
Federal Reserve Bank at Spokane, Washington,
from the Federal Reserve Bank at Portland, Ore-
gon, a further description of said letter being to
the Grand Jurors unknown, but which said letter
contained a check which was in words and figures
as follows, to-wit:

** Picture of Eagle
District No. 12
Member Federal
Reserve System

Farmers & Merchants Bank 98-186
Rockford, Wash. Dec. 6 1935 No.
Pay to Order of F. C. Adams $300.00
Three Hmidred and no/100 Dollars

E. C. DEIBERT
N.P.
24-8

United States of America 27

(Reverse Side)
(Stomps)

*^Pay to the Order of any Bank or Banker or
through the Portland Clearing House

All prior endorsements guaranteed
Dec. 7, 1935
24-1 Portland Branch 24-1

Federal Reserve Bank of San Francisco'*

''Pay to the Order of any Bank or Banker or
through the Portland Clearing House

All prior endorsements guaranteed
Dee. 9, 1935
28-1 Spokane Branch 28-1

Federal Reserve Bank of San Francisco"

Contrary to the form of the statute in such case
made and provided and against the peace and dig-
nity of the United States of America. [21]

And the Grand Jurors aforesaid, upon their oaths
and affirmations aforesaid, do further find, charge,
allege and present :

Count Six:

That Joe Mazurosky, the defendant above-named,
prior to September 12, 1935, the exact date being to
the Grand Jurors unknown, acting jointly with
Frank Faircloth, alias Dr. Pierce, and William H.
Londergan, Jr., alias J. C. Adams, together with
other persons to the Grand Jurors unlaiown, did

28 Joe Mazurosky vs.

devise a certain artifice and scheme to defraud
and, ])y means of false and fraudulent pretenses,
representations and promises, to obtain money and
property from a certain class of persons, including
one E. C. Deibert, then resident in divers communi-
ties within the United States, who, by reason of age
or infirmities and a lack of knowledge and experi-
ence concerning medical and surgical practice, could
be induced to give credulity to the false representa-
tions herein described ; that said scheme and artifice
and pretenses, representations and promises were
identical with those described in Coimt Two of this
indictment and the allegations of Count Two de-
scriptive of said scheme and artifice and pretenses,
representations and promises, and the falsity there-
of, are hereby referred to and by reference incor-
porated herein as if here repeated;

That thereafter, and on or about the 7th day of
December, 1935, the exact date being to the Grand
Jurors unknown, the said false and fraudulent pre-
tenses, representations and promises having been
made to the said E. C. Deibert, and the defendant
and the said Franli Faircloth, alias Dr. Pierce,
and William H. Londergan, Jr., having secured
from the said E. C. Deibert, by means of said false
and fraudulent promises and representations a
check in the sum of $300.00, and while said scheme
and artifice was still in effect, the said defendant,
Joe Mazurosky, for the purpose of executing said
scheme and artifice to defraud and to obtain money
and property from the said E. C. Deibert, did

United States of America 29

unlawfully, [22] knowingly, wilfully and feloniously
place and cause to be placed in the United States
Post Office at Rockford, Washington, and sent and
delivered to the addressee thereof by the Post Office
Establishment of the United States, according to
the address and direction thereon, a letter enclosed
in a postpaid envelope, addressed to the First
National Bank of Portland, Oregon, at Portland,
in the State and District of Oregon, from the Farm-
ers & Merchants Bank, Rockford, Washington, a
further description of said letter being to the Grand
Jurors miknown, but which said letter contained a
check which was in words and figures as follows,
to-wit :
''(Picture of Eagle)"

District Xo. 12 Member Federal Reserve System
''Farmers & Merchants Bank 98-186
Rockford, Wash. Dec. 6 1935 No.

Pay to the Order of F. C. Adams $300.00

Three Hundred and no/100 Dollars

E. C. DEIBERT"
N. P.

24-8

(Across Face) "Payment Stopped 12/10/35"

(Reverse Side)
(Stamps)

"Pay to the Order of any Bank or Banker or
through the Portland Clearing House

All prior endorsements guaranteed

30 Joe Ma^urosTcy vs.

Dec. 7 1935

24-1 Portland Branch 24-1

Federal Reserve Bank of San Francisco"

'*Pay to the Order of any Bank or Banker or
through the Portland Clearing House

All prior endorsements guaranteed
Dec. 9, 1935
28-1 Spokane Branch 28-1
Federal Reserve Bank of San Francisco"

Contrary to the form of the statute in such case
made and provided and against the peace and dig-
nity of the United States of America. [23]

And the Grand Jurors aforesaid, upon their oaths
and affirmations aforesaid, do further find, charge,
allege and present:

Count Seven:

That prior to the 12th day of September, 1934,
and continuously thereafter to and including the
27th day of October, 1937, the exact dates being to
the Grand Jurors unkno\\TL, in the State and Dis-
trict of Oregon, and within the jurisdiction of this
Court, and at divers other places to the Grand
Jurors imlaiown, the defendant, Joe Mazurosky,
did then and there wilfully, imlawfuUy, knowingly
and feloniously conspire, combine, confederate and
agree with Roy L. Martin, alias Dr. JVIiles, alias
O. C. Stone; Herbert C. Crangle, alias Dr. Avery;
John M. Gray, alias Dr. Pierce, alias H. J. Pierce;

United States of America 31

Thomas A. Andrews, alias Judge Thomas, and with
divers other persons to the Grand Jurors unknown,
to commit certain offenses against the United States
of America, to-wit: to use the United States Mails
to defraud in violation of Section 338, Title 18,
U. S. C. A., and among the said violations to com-
mit the divers offenses charged against said defend-
ant in Count One of this indictment, the allegations
of which count descriptive of the fraudulent scheme
and artifice and the pretenses, representations and
promises, and the uses of the United States Mails
in furtherance of said scheme and artifice after it
had been devised, are hereby referred to and by
reference incorporated in this comit as if here re-
peated, and each and all of said acts of the defend-
ant and of said co-conspirators, so described in said
count of this indictment are now here designated
as overt acts of the said defendant and said co-
conspirators, done in pursuance of and to effect the
objects of said conspiracy;

That, in addition thereto, for the purpose of exe-
cuting said mil awful conspiracy, and to effect the
objects thereof, and also to effect the objects of
said conspiracy between the defendant and said co-
conspirators to commit other like offenses, while
said unlawful com- [24] bination and conspiracy
was in existence, defendant and certain of said co-
conspirators, at the several times and places in that
j behalf hereinafter mentioned, did and caused to be
I done the following described separate overt acts,
to-wit :

32 Joe Mazurosky vs.

(1) On or about September 12, 1934, the said
John M. Gray, alias Dr. Pierce, alias H. J. Pierce,
and the said Thomas A. Andrews, alias Judge
Thomas, drove to the home of Clara E. Allen, at
Longmont, Colorado, where the said John M. Gray
represented himself to be Dr. Miles, a cancer
spiecialist ;

(2) On or about September 12, 1934, the said
John M. Gray, alias Dr. Pierce, alias H. J. Pierce,
and the said Thomas A. Andrews, alias Judge
Thomas, obtained from the said Clara E. Allen a
cashier's check in the sum of $500, on the Mercan-
tile Banl^: and Trust Company, Boulder, Colorado;

(3) On or about September 27, 1934, the defend-
ant, Joe Mazurosky, presented said check to the
United States National Bank at Portland, Oregon,
for collection;

(4) On or about the 29th day of October, 1934,
the said John M. Gray, alias Dr. Pierce, alias H. J.
Pierce, and the. said Thomas A. Andrews, alias
Judge Thomas, called at the home of Christine M.
Mershon at McMurray, Washington ;

(5) On or about the 30th day of October, 1934,
the defendant, Joe Mazurosky, tendered to the Bank
of California, N. A., at Portland, Oregon, for de-
posit, a certain check in the amount of $450, signed
by Christine M. Mershon, directed to the Arlington
State Bank, of Arlington, Washington;

That at all times during the existence of said con-
spiracy it was the intention of defendant and said
co-conspirators that the United States Mails should
and would be used to effect the objects of said con-

United States of America 33

spiracy ; contrary to the form of the statute in such
case made and provided and against the peace and
dignity of the United States of America. [25]

And the Grand Jurors aforesaid, upon their oaths
and affirmations aforesaid, do further find, charge,
allege and present :

Coimt Eight:

That prior to the 12th day of September, 1934,
and continuously thereafter to and including the
27th day of October, 1937, the exact date being to
the Grand Jurors unknown, in the State and Dis-
trict of Oregon, and within the jurisdiction of this
court, and at divers other places to the Grand
Jurors unknown, the defendant, Joe Mazurosky,
did then and there wilfully, imlawfully, knowingly
and feloniously conspire, combine, confederate and
agree with Frank Faircloth, alias Dr. Pierce, and
, William H. Londergan, Jr., alias J. C. Adams, and
, with divers other persons to the Grand Jurors un-
, known, to commit certain offenses against the United
States of America, to-wit : to use the United States
Mails to defraud in violation of Section 338, Title
18, U. S. C. A., and among the said violations to
commit the divers offenses charged against said de-
fendant in Counts Two, Three, Four, Five and Six
of this indictment, the allegations of which counts
descriptive of the fraudulent scheme and artifice,
and the pretenses, representations and promises and
; the uses of the United States Mails in furtherance
: of said scheme and artifice after it had been devised,
tare hereby referred to and by reference incorpo-
rated in this count as if here repeated, and each

34 Joe Mazurosky vs.

and all of said acts of the defendant and of said
co-conspirators, so described in said counts of this
indictment are now here designated as overt acts of
the said defendant and said co-conspirators, done in
pursuance of and to effect the objects of said con-
spiracy ;

That, in addition thereto, for the purpose of exe-
cuting- said unlawful conspiracy, and to effect the
objects thereof, and also to effect the objects of said
conspiracy between the defendant and said co-
conspirators to commit other like offenses, while
said unlawful combination and conspiracy was in
existence, defendant and certain of said co-con-
spirator?', at the several times and places in that
behalf hereinafter mentioned, did and caused to be
done the following described separate overt acts,
to-wit: [26]

(1) On or about the 12th day of September, 1935,
Frank Faircloth, alias Dr. Pierce, and William H.J
Londergan, Jr., alias J. C. Adams, went to the home
of H. F. Belter, near Kennewick, Washington, and i
pretended to perform an operation on the eye of
H. F. Belter;

(2) On or about the 20th day of September, 1935,
defendant, Joe Mazurosky, went to the Bank of
California, N. A., at Portland, Oregon, and tendered
for deposit and deposited a certain check dra\Mi
upon the First National Bank of Kennewick, Wash-
ington, dated September 20, 1935, signed by H. F.
Belter;

(3) On or about September 27, 1935, defendant,
Joe Mazurosky, went to the Bank of California,

United States of America 35

N. A., at Portland, Oregon, and directed said bank
to hold a check of H. F. Belter on the First National
Bank of Kennewick, Washington, for a few days and
re-present the same to the First National Bank of
Kennewick, Washington, for payment ;

(4) On or about the 6th day of December, 1935,
defendant, Joe Mazurosky, went to the First Na-
tional Bank of Portland, Oregon, and tendered for
payment a certain check drawn upon the Farmers
and Merchants Bank, Rockford, Washington, dated
December 6, 1935, in the sum of $300, signed by
E. C. Deibert;

That at all times during the existence of said con-
spiracy it was the intention of defendant and said
co-conspirators that the United States Mails should
and would be used to effect the objects of said con-
spiracy ; contrary to the form of the statute in such
case made and provided and against the peace and
dignity of the United States of America.

A true bill.

Dated at Portland, Oregon, this 8th day of Feb-
ruary, 1938.

KENNETH S. REED
Foreman, United States Grand Jury
CARL C. DONAUGH

United States Attorney
' J. MASON DILLARD

Assistant United States Attorney

[Endorsed] : A true bill.

KENNETH S. REED

Foreman.

[Endorsed] : Filed Feb. 8, 1938. [27]

36 Joe Ma^nrosky vs.

And afterwards, to-\vit, on Friday, the 25th day
of February, 1938, the same being the 96th Judicial
day of the Regular November 1937 Term of said !
Court; present the Honorable James Alger Fee,
United States' District Judge, presiding, the fol-
lowing proceedings were had in said cause, to-wit: I

[28] 1
[Title of Cause.]

February 25, 1938.

Indictment : Sections 388 and 88, Title 18, United j
States Code.

Now at this day comes the plaintiff by Mr. i
J. Mason Dillard, Assistant United States Attorney, '
and the defendant above named in his own proper
person and by Mr. Edward Butler, of comisel.
Whereupon the said defendant is duly arraigned
upon the indictment herein, and for plea thereto,
says that he is not guilty. [29]

And afterwards, to-wit, on Friday, the 18th day
of March, 1938, the same being the 2nd Judicial day
of the Special Medford 1938 Term of said Court;
present the Honorable James Alger Fee, United
States District Judge, presiding, the following pro-
ceedings were had in said cause, to-wit: [30]

[Title of Cause.]

March 18, 1938.

Indictment: Sections 338 and 88, Title 18, United
States Code.

United States of America 37

Xow at this day comes the plaintiff by Mr.
J. Mason Dillard and Mr. Manley B. Strayer, As-
sistant United States Attorneys, and the defendant
above named in his own proper person and by Mr.
Hugh L. Biggs and Mr, Pat J. Gallagher, of coun-
sel. Whereupon the jurors impaneled herein being
present, the further trial of this cause is resumed.
The said jury having heard the evidence adduced,
at the close of all the evidence, plaintiff and defend-
ant each ha^dng rested its case, the defendant moves
the court to instruct the jury to return a verdict of
not guilty and the court having heard the argu-
ments of counsel, and the hour of adjournment
having arrived, the further trial of this cause is
continued to tomorrow, Saturday, March 19, 1938,
at nine o'clock A. M. [31]

And afterwards, to wit, on Saturday, the 19th day
of March, 1938, the same being the 3rd Judicial day
of the Special Medford 1938 Term of said Court;
present the Honorable James Alger Fee, United
States District Judge, presiding, the following pro-
ceedings were had in said cause, to wit: [32]

[Title of Cause.]

March 19, 1938.

Indictment : Sections 338 and 88, Title 18, United
States Code.

Now at this day comes the plaintiff by Mr.
J. Mason Dillard and Mr. Manley B. Strayer, As-

38 Joe Ma^urosky vs.

sistant United States Attorneys, and the defendant
above named in his own proper person and by Mr.
Hugh L. Biggs and IVIr. Pat J. Gallagher, of coim-
sel. Whereupon the jurors impanelled herein being
present, the further trial of this cause is resumed.
Whereupon the court having fully considered the
motion of the defendant for a directed verdict of
not guilty, and being fully advised in the premises,

It is ordered that said motion be and the same is
hereby denied as to Comits Four, Seven and Eight
of the indictment, and

It is ordered that said motion be and it is hereby
allowed as to Counts One, Two, Three, Five and Six
of the indictment, and that the jury return a verdict
of not guilty as to each of said Counts of the in-
dictment.

The said jury having heard the arguments of
counsel and the instructions of the court, retires in
charge of proper sworn officers to consider of its
verdict. Whereupon this cause having been finally
submitted to the jury,

It is ordered that Eavl T. Newbry, heretofore
sworn as an alternate juror, be discharged from
further service herein.

Thereafter, plaintiff being present by Mr. J. Ma-
son Dillard and Mr. Manley B. Strayer, Assistant
United States Attorneys, and the defendant in liis
proper person and by Mr. Hugh L. Biggs and Mr.
Pat J. Gallagher, of comisel, said jury comes into
court and returns its verdicts in words and figures
as follows, to wit:

United States of America 39

'*We, the Jury duly impaneled and sworn to

try the above-entitled cause, by direction of the

Court do find the defendant, Joe Mazurosky,

Not Guilty as charged in Count One of the

Indictment herein; [33]
Not Guilty as charged in Count Two of the

Indictment herein;
Not Guilty as charged in Count Three of

the Indictment herein ;
Not Guilty as charged in Count Five of the

Indictment herein ; and
Not Guilty as charged in Count Six of the
Indictment herein.

Dated at Medford, Oregon, this 19th day of
March, 1938.

ELBERT L. LENOX

Foreman '*

''We, the Jury duly impaneled and sworn to
try the above-entitled cause, do find the defend-
ant, Joe Mazurosky,

Guilty as charged in Count Four of the

Indictment herein;
Guilty as charged in Count Seven of the

Indictment herein; and
Guilty as charged in Count Eight of the
Indictment herein.

Dated at Medford, Oregon, this 19th day of
March, 1938.

ELBERT L. LENOX

Foreman"

40 Joe Mazuroslxy vs.

and it is ordered that said verdicts he received and
filed and that the jury be discharged from further
consideration of this cause. Whereupon upon mo-
tion of plaintiff,

It is ordered that it be and is hereby allowed to
withdraw all exhibits introduced upon the trial of
this cause and substitute photostatic copies there-
for. [34]

And afterwards, to wit, on the 19th day of March,
1938, there was duly filed in said Court, a Verdict
in words and figures as follows, to ^mi: [35]

[Title of District Court and Cause.]

VERDICT

We, the Jury duly impaneled and sworn to try
the above-entitled cause, do find the defendant, Joe
Mazurosky,

Guilty as charged in Count Four of the Indict-
ment herein;
Guilty as charged in Count Seven of the Indict-
ment herein; and
Guilty as charged in Count Eight of the Indict-
ment herein.

Dated at Medford, Oregon, this 19th day of
March, 1938.

ELBERT L. LENOX

Foreman

[Endorsed] : Filed March 19, 1938. [36]

United States of America 41

And afterwards, to wit, on Saturday, the 19th
day of March, 1938, the same being the 3rd Judicial
day of the Special Medford 1938 Term of said

Court ; present the Honorable _ , United

States District Judge, presiding, the following pro-
ceedings were had in said cause, to wit: [37]

In the District Court of the United States
for the District of Oregon

Indictment

Sections 338 and 88, Title 18, U. S. C. A.

No. C-15297 March 19, 1938.

THE UNITED STATES OF AMERICA,

VS'.

JOE MAZUROSKY,

Defendant.

JUDGMENT

Now at this day comes the plaintiff by Mr. J. Ma-
son Dillard and Mr. M. B. Strayer, Assistant
United States Attorneys, and the defendant above
named in his own proper person and by Mr. Hugh
L. Biggs and Mr. Pat Gallagher, of counsel; and
the defendant having heretofore been convicted by
the verdict of a jury in this court and cause of the
crime of unlawfully using the United States Mailsi
in furtherance of a scheme to defraud, as charged
in Count Four of the indictment herein, and un-
lawfully conspiring to use the United States Mails

42 Joe Maznrosky vs.

m furtherance of a scheme to defraud, as charged
in Count Seven of the indictment herein, and
unlawfully conspiring to use the United States
Mails in furtherance of a scheme to defraud, as
charged in Comit Eight of the indictment herein,
as appears of record herein; and said defendant
waiving time and consenting that sentence may 1)6
imposed at this time.

It is adjudged that the said defendant do pay a
fine of One Thousand Dollai's and be imprisoned
for a term of Five Years and from and after the
expiration of said term imtil said fine be paid for
the offense charged in Count Four of the indict-
ment, and that said defendant do pay a fine of
Five Thousand Dollars and be imprisoned for a
term of Tw^o Years and from and after the expira-
tion of said term until said fine be paid for the
offense charged in Count Seven of the indictment,
and that said defendant do pay a fine of Five Thou-
sand Dollars and be imprisoned for a term of Two
Years and from and after the exjoiration of said
term until said fine be paid for the offense charged
in Count Eight of the indictment herein; that the
terms of imprisjonment imposed for the offenses
charged in Counts Seven and Eight of the indict-
ment run concurrently and begin to run upon the
termination of the sentence imposed for the offense
charged in Count Four of the indictment herein.
A total sentence of Eleven Thousand Dollars fine
and seven years; that said sentence of imprison-
ment be executed in a United States Penitentiary

United States of America 43

to be designated by the Attorney General of the
United States or his authorized representative,
and that said defendant stand committed until this
sentence be performed or until he be otherwise
discharged according to law.

JAMES ALGER FEE

Judge
[Endorsed] : Filed March 19, 1938. [38]

And afterwards, to wit, on Tuesday, the 19th day
of April, 1938, the same being the 37th Judicial
day of the Reg^ular March 1938 Term of said Court ;
present the Honorable James Alger Fee, United
States District Judge, presiding, the following pro-
ceedings were had in said cause, to wit: [39]

[Title of District Court and Cause.]

ORDER ALLOWING TIME FOR FILING BILL
OF EXCEPTIONS AND ASSIGNMENTS
OF ERROR

At this time this matter coming on to be heard
on the motion of Defendant and Appellant herein,
appearing by and through his attorney, Edwin D.
Hicks, for an order extending the time in which
■ to file bill of exceptions and assignments of error
iin the within appeal until and including the first
day of May, 1938, and it appearing from said
motion that good cause has been shown for the
allowance of such extension of time in which to
file bill of exceptions and assignments of error

44 Joe Ma^urosky vs.

herein and the Court being fully informed in the
premises :

It ist ordered that the Defendant and Appellant
have and he is hereby granted until and including
the first day of May, 1938, in which to file bill of
exceptions and assignments of error in respect of
the appeal which has heretofore been taken in this
cause.

Dated this 19th day of April, 1938.

JAMES ALGER FEE
Judge of the District Court

[Endorsed] : Filed April 19, 1938. [40]

And afterwards, to wit, on the 28th day of April,
1938, there was duly filed in said Court, a Stipula-
tion for Transcript of Record in words and figures
as follows, to wit: [41]

[Title of District Court and Cause.]

STIPULATION

It is hereby stipulated by and between the parties
to the within cause, through their attorneys of rec-
ord, that the transcript to be prepared by the Clerk
of the Court and transmitted to the United States
Circuit Court of Appeals for the Ninth Circuit
shall consist of the following :

(1) Indictment;

(2) Record of Arraignment and Plea;

United States of America 45

(3) Record of Trial Containing Motion for
Directed Verdict ;

(4) Record of Verdict ;

(5) Verdict of Guilty;

(6) Sentence and Judgment;

(7) Notice of Appeal;

(8) Order Extending Time in which to file Bill
of Exceptions and Assignment of Errors;

(9) Bill of Exceptions;

(10) Assignment of Errors;

(11) Stipulation as to Record.

Praecipe for Record to be prepared by the Clerk
under Rule Nine of the Rules of the Supreme Court
of the United States governing Appeals in crimi-
nal cases.

M. B. STRAYER
Assistant United States Attorney
for the District of Oregon
EDWIN D. HICKS
Attorney for Defendant and Appellant

[Endorsed] : Filed April 28, 1938. [42]

And afterwards, to wit, on the 28th day of April,
1938, there was duly filed in said Court, a Praecipe
for transcript of the record on appeal, in words and
figures as follows, to vdt: [43]

46 Joe Macurosky vs.

[Title of District Court and Cause.]

PRAECIPE

To: Hon. G. H. Marsh, the Clerk of the United
States Court:

You are hereby directed to please prepare and
certify the record in the above entitled cause for
transmission to the United States Circuit Court
of Appeals for the Ninth Circuit, including therein |
a certified copy of all papers filed and proceedings ^
had in the above entitled cause which are pertinent
to the Appeal, and especially including therein the J
following documents:

(1) Indictment;

(2) Record of Arraignment and Plea;

(3) Record of Trial containing Motion for
Directed Verdict;

(4) Record of Verdict;

(5) Verdict of Guilty;

(6) Sentence and Judgment;

(7) Notice of Appeal ;

(8) Order Extending Time in which to file Bill
of Exceptions and Assignments of EiTor;

(9) Bill of Exceptions ;

(10) Assignments of Error;

(11) Stipulation as to Record;

(12) This Praecipe,

omitting titles, verifications, and acceptance of serv-
ice on all said documents except the Indictment and
the Notice of Appeal. [44]

United States of America 47

Dated at Portland, Oregon, this 28th day of
April, 1938.

EDWIN D. HICKS
Attorney for Defendant and Appellant

[Endorsed] : Filed April 28, 1938. [45]

United States of America,
District of Oregon — ss.

I, G. H. Marsh, Clerk of the United States Dis-
\ trict Court for the District of Oregon, do hereby
certify that the foregoing pages numbered from 1
to 45, inclusive, contain a transcript of the matters
of record in said court pertinent to the appeal from
1 a judgment and sentence in a certain criminal
i cause then pending in said court numbered C-15297,
! in which the United States of America is plaintiff
I and appellee, and Joe Mazurosky is defendant and
appellant, as designated by the stipulation and prae-
cipe for transcript tiled in said cause by said appel-
lant; that I have compared the foregoing transcript
with the original record thereof and that it is a full,
true and correct transcript of the record and pro-
ceedings had in said court in said cause as desig-
nated by the said stipulation and praecipe, as the
same appears of record at my office and in my cus-
tody.

I further certify that the cost of the foregoing
[transcript is $15.90, and that the same has been paid
by said appellant.

48 Joe Mazurosky vs.

I further certify that there is transmitted to the
United States Circuit Court of Appeals for the
Ninth Circuit, with the foregoing transcript, the
original bill of exceptions and the original assign-
ment of errors filed in said cause by said appellant.

In testimony whereof I have hereunto set my
hand and affixed the seal of said court at Portland,
in said District, this 29th day of April, 1938.

[Seal] G. H. MARSH,

Clerk. [46]

[Title of District Court and Cause.]

BILL OF EXCEPTIONS

Be it remembered, that the above entitled cause
came on regularly for trial Thursday, March 17,
1938, at 9:00 o'clock A.M., in the above entitled
court, at Medford, Oregon, before the Honorable
James Alger Fee, Judge, presiding, and a jury of
twelve men, duly and regularly empanelled and
sworn, the United States of America appearing by
its attorneys, Messrs. J. Mason Dillard and Manley
Strayer, Assistant United States Attorneys, and
defendant appearing by his attorneys, Messrs. Hugh
L. Biggs and P. J. Gallagher.

Whereupon the following proceedings were had:

C. B. WELTERS

was thereupon produced as a witness in behalf of
the United States, and, having been first duly
sworn, was examined and testified as follows:

United States of America 49

(Testimony of C. B. Welter.)

Direct Examination
By Mr. Dillard: '

My name is C. B. Welter. I am a postoffice in-
spector of the United States Government and have
served in such capacity for thirty-one years. I am
acquainted with and have had conversation with the
defendant, and am familiar with his signature.

(At this point Government's exhibits, num-
bered 1, 3, 4, 5, and 7 were marked for identi-
fication and were identified as each bearing the
endorsement "Joe Mazurosky" (defendant) on
the back thereof.)

FRANK NELSON

was thereupon produced as a witness in behalf of

I the United States, and, having been first duly sworn,

:was examined and testified as follows: [49]
i

Direct Examination

By Mr. Dillard:

My name is Frank Nelson and I reside at this
time at the House of Correction, Milwaukee, Wis^
cousin. I have examined government's exhibit '*4"
for identification, being a check drawn by ''H. F.
Belter" and state that I first saw this check in the
fall of 1935. At that time my partner, Mr. Londer-
gan, and I called at Mr. Belter's home in the vicinity
of Rockford, Washington. Mr. Londergan had in-
iformation about him.

50 Joe Ma^urosky vs.

(Testimony of Frank Nelson.)

I have known the defendant Joe Mazurosky about
nineteen or twenty years, I should judge. I met him
either during or shortly after the world war. I
was in the army but the defendant was not in the
army at that time. I met the defendant through a
mutual friend, Dr. Brown, who had an optical store
next to hisi place of business. I saw the defendant
quite frequently after that time, either at his place
of business, in Portland, Oregon, or at the optical
store. We used to visit back and forth. We played
cards some. We have been good friends since that
time as far as I was concerned.

Q. Did it continue up until 1935, would you
say?

A. Yes, sir.

I have examined Government's exhibit No. 7 for
identification, which you have handed me, and state
that I first saw the exhibit in either 1925 or 1926;
I don't remember the exact date or year. Henry
Wagner was the maker of the check. I had just
known Mr. Wagner a few hours when that check
was made out.

Referring back to the other check, exhibit 4 for
identification, I will state that I received Four Hun-
dred ($400.00) Dollars as the proceeiis of that!
check. I received the money from Mr. Mazurosky
a month or six weeks after the date of the check.
I was in Spokane, AVashington, at the time and
received the check [50] through the mail. The
letter enclosing the check was addressed ''Frank W.

United States of America 51

(Testimony of Frank Nelson.)

Nelson'- to my Spokane address. My endorsement

does not appear on the back of the check. It does

bear the endorsement of my partner, Mr. Londer-

gan, who was then going under the name of J. C.

Adams.

Q. How did you happen to receive the proceeds
of that check from Joe Mazurosky?

A. Well, I sent him this check.

Q. How did you send it to him*?

A. By mail.

I sent the check to the defendant's address in

Portland, Oregon. It was a Five Hundred ($500.00)

Dollar check and I received back Four Hundred

; ($400.00) Dollars. I owed Mr. Mazurosky Twenty

i ($20.00) Dollars and I gave him Fifty ($50.00)

! Dollars for cashing the check and told him to keep

Thirty ($30.00) Dollars for interest on what I owe

him.

Mr. Dillard: Q. I will ask you, Mr. Nelson, if
; you ever had a conversation with Joe Mazurosky,
■ the defendant, relative to the cashing of checks that
might be sent to him by you.

A. Well, I really couldn't say that I did have
any understanding.

Q. Did you ever talk with Joe Mazurosky, the
I defendant, about a commission for cashing this
check or other checks of a similar character?
j Mr. Biggs: That is leading and suggestive, if
'the Court please.

The Court: Overruled.

52 Joe Mazurosky vs.

(Testimony of Frank Nelson.)

Mr. Biggs: An exception that must be taken
after each ruling.

A. Well, there was only one time to my knowl-
edge; the defendant told me that ten (10%) per
cent wasn't enough, he would have to have more
money than that. [51]

Mr. Dillard: Q. About when was that?

A. That was in '35.

Q. At that time did he say any more than that,
that ten (10%) per cent wasn't enough?

Mr. Biggs: That is leading and suggestive, if
the Court please. I see no reason why this witness
can't state the conversation without having the
words put in his mouth.

The Court : Overruled.

A. He just said that the checks were getting ,
a little hot and he would have to have more com-
mission.

Mr. Dillard: Q. Now I will refer you to the
other check you have in your hand, Exhibit 7 for
identification, bearing the signature of the maker,
Wagner. I will ask you if you ever had a conversa-
tion with Joe Mazurosky about that check.

A. Well, there was a Thousand ($1,000.00) Dol-
lars given to Mazurosky. The check came back; the

signature wasn't satisfactory I left that part

of the country at the time and didn't return for
three or four years, and upon my return to Port-
land I casually asked Joe if it really cost a thousand
dollars to square that check and he said, ''Well,
you still owe me money."

United States of America 53

(Testimony of Frank Nelson.)

Q. Wliat did Joe Mazurosky say, if anything?

A. He merely said, "You still owe me money."

I was present when the check was signed by Mr.
Wagner. It was delivered to me.

Q. How did Mr. Wagner happen to give you a
check for Five Hundred ($500.00) Dollars?

A. I called on Mr. Wagner at his home

Mr. Biggs : Just a moment, the defendant objects
to the introduction of any testimony concerning
the manner or means or time or place of the taking
of that check. It is not shown to be set up in the
indictment. It is not the basis for one of the charges
made in the indictment ; it is dated, as already iden-
tified, some [52] thirteen years prior to the indict-
ment and some nine years prior to the date the
alleged conspiracy commenced, and therefore is too
remote to be admitted imder the theory of any
similar transactions, if that is what is claimed
for it.

Mr. Dillard: It is offered, your Honor, to show
knowledge on the part of the defendant. It will
develop that — well, it is offered to show knowledge.

The Court: Let me see those two checks. You
are now asking about Exhibit No. 7?

Mr. Dillard: Yes, your Honor.

The Court : I think that sulScient basis is not
laid so that evidence can be introduced as to
check No. 4.

I Mr. Dillard: I will refer you back then, Mr.
Nelson, to Exhibit 4, the Belter check. Was that
[check ever in your possession?

54 Joe Mazurosky vs.

(Testimony of Frank Nelson.)

A. It was.

Q. And will you tell how it happened to come
into your possession?

Mr. Biggs : If the Court please, for the purpose
of the record I enter my objection to that, the
original objection that was made to that testimony.
I understand the Court hasn't ruled on it.

The Court : Yes, the Court has ruled that a suffi-
cient basis has been laid so that the transaction by
which this check was obtained is admissible.

Mr. Biggs: And an exception.

The Court: An exception is allowed.

My partner, Mr. Londergan, and I called on
Mr. Belter at his home and I was introduced to Mr.
Belter by Mr. Londergan as an eye, ear, nose and
throat specialist from Buffalo, N. Y., and I [53]
told him that he had a very serious condition of the
eye and he should go in and call on an oculist and
have his eye treated, and he asked me if I could do
the work for him there at home and I consented to
do the work for him in his home and received in
exchange Three Hundred ($300.00) Dollars in cash
and a check for Five Hundred ($500.00) Dollars,
this check. Mr. Belter's home was located in the
country out of Kenne\\ick, Washington, two or
three miles out. Mr. Belter was a man around
seventy years old. I was only at his home possibly
an hour altogether.

United States of America 55

(Testimony of Frank Nelson.)

I was not at that time an eye doctor; I am an
optometrist by profession. I was not an eye special-
ist. At the time I went by the alias name of Dr.
Pierce. My partner was representing himself as
Dr. Adams.

I explained to Mr. Belter that he had a very
serious eye trouble and I used a piece of fish skin
that I put in his eye, and used Murine; I told him
it was radium, and I think his wdfe or his sister
was there at the time, and I took this piece of skin
out of his eye and told him it was a cancerous
cataract.

Mr. Dillard : Q. What information did you
have at the time that you received that check from
Mr. Belter as to how^ or when it would be paid by
the bank on which it was drawn?

A. We went to the banl'C and he only had Three
Hundred ($300.00) Dollars in cash in the bank and
he was unable to get the money that day, the bal-
ance of Five Hundred ($500.00) Dollars more, so
he made arrangements with the bank to get the
money the next day and he gave us a check and told
us to present it to the bank possibly a week or ten
days later and the money would be paid.

Q. I will ask you if you conveyed that informa-
cion to Joe Mazurosky?
! A. I don't remember exactly. [54]

Mr. Dillard: Now I am going to refer you back
again to Exhibit 7, being a check signed by Mr.
Wagner.

56 Joe Maztirosky vs.

(Testimony of Frank Nelson.)

Mr. Biggs: If the Court please, would it be
proper at this time for the defense to ask the |
Government to advise the defense on what date the
alleged conspiracy set up in the indictment com-
menced? I think it may have some bearing on the
admissibility of this testimony. The indictment is
indefinite on that point.

Mr. Strayer: All we can say on that is, we have
alleged all we could in the indictment. We have al-
leged it originated prior to 1934. How far back it I
extended we don't know. We think there is evi-
dence that it extended clear back into 1925, but that
is all the information we can furnish coimsel. 1

Mr. Biggs: If they are not ready to claim the
conspiracy did start at that time that would be an
additional ground of objection to Government's
Exhibit 7, Your Honor.

The Court : The Court w^ill admit the testimony in |
view of the matters that have been already testified
regarding Government's Exhibit 7. .1

Mr. Biggs: May we have an exception to the
Court's ruling?

The Court : Yes.

It w^as in 1931 that I had the conversation with
Mazurosky regarding the Thousand ($1,000.00)
Dollars.

I came into possession of the Wagner check, Ex-
hibit 7, mider the following circumstances. I called
on Mr. Wagner at his home, introduced myself as
a local optometrist from Vancouver, Washington,
and examined his eyes and told him that he had a

United States of America 57

(Testimony of Frank Nelson.)

trouble that I really didn't understand myself, that

he should consult an eye, ear, nose and throat

specialist, and I asked him if he knew anybody in

Vancouver or Portland that he was personally [55]

acquainted with that he cared to go see, and he said

that he didn't, so I told him about a party that was

with me that was an eye specialist and that if he

would go out and ask him to come in that he might

give what information he needed, so he did that. I

told him my partner (Dr. Brown) was Dr. Ains-

worth. He called Brown into the house and Browoi

performed an operation for him on his eye. At that

time we were using the skin of an egg. He put that

on the eye and removed it from the eye, and showed

it to him and charged him Six Hundred Seventy-

i five ($675.00) Dollars, I think it was. We got two

; checks, one for One Hundred Seventy-Five

j ($175.00) Dollars and one for Five Hundred

I ($500.00) Dollars. The one for $175.00 Dr. Brown

cashed at one of the banks in Vancouver, Washing-

i ton. I took the other Wagner check to another bank

and he refused to cash it, but the banker certified

the check. I am referring now to Exhibit 7 for

identification. When he refused to cash the check I

gave it to my partner. Dr. Brown, and from that

day until last year I never saw the check any more.

I Dr. Brown was a friend of Mr. Mazurosky as well

; as myself. He was the gentleman who had the store

; next door to Mazurosky 's store, the optical store.

i Mr. Dillard: Q. Did you ever discuss this plan

or means that you have described here of obtaining

58 Joe Mazuroshy vs.

(Testimony of Frank Nelson.)

these checks from the Belters and the Wafers

with Joe Mazurosky, or discuss it in his presence?

A. I don't really think we ever did discuss it.

I do not remember of having any conversation
with him in that regard. I did not recover the pro-
ceeds of the Five Hundred ($500.00) Dollar
Wagner check.

Mr. Dillard: Q. I will ask you if either you or
this man Browm that you refer to ever discussed
this system of obtaining money from people which
you have described you used in the Wagner [56J
instance. Did you ever discuss it in the presence of
the defendant?

A. No, sir, I don't think that I qyqy discussed it
with Mazurosky or with Bro"v\Ti before any of us
together.

Referring to Government's Exhibit 5 for identi-
fication, the photograph of the Deibert check, I will
state that I first saw that check some time in 1935
at Rockford, Washington, and I also saw it in Spo-
kane, Washington. I received it from my partner,
Mr. Londergan, in the presence of Mr. Deibert. I
sent it through the mail to Mazurosky for collection.
I know of my own knowledge the circumstances
under which Mr. Londergan received the Deibert
check.

Mr. Dillard: Q. Will you tell about it then?

Mr. Biggs : If the Court please, to keep the record
straight, we object to the testimonj^ — any testimony
as to the statements of this \^^tness or his partner
identified here as Londergan in the absence and out

United States of America 59

( Testimony of Frank Nelson.)

of the presence of the defendant, Joe Mazurosky.

The Court: The objection is overruled.

Mr. Biggs: An exception.

A. My partner, Londergan, under the name of
J. D. Adams, and I called on Mr. Deibert at his
home and I was introduced as Dr. Pierce and I
performed the usual operation on the eye and
charged Mr. Deibert Three Hundred ($300.00)
Dollars. We went to the bank to get the money and
he couldn't get the money so he gave us a post-
dated check for Three Hundred ($300.00) Dollars.
I didn't see the check written out. It was given
to my partner and brought over to the car and
Londergan gave me the check to send in for collec-
tion, which I did. I sent it from Spokane to Joe
Mazurosky in Portland and never heard any more
about it.

Mr. Dillard : Q. Now Mr. Nelson, you have told
about sending the Belter check to Joe Mazurosky
and the Deibert check to Joe [57] Mazurosky. I
vAW ask you to state in your own words, why you
sent those checks to Joe Mazurosky instead of tak-
ing them to some local bank to cash them and get
the proceeds?

A. Well, I knew that the checks were to be
handled through him.

Mr. Biggs: I object to that as a conclusion of the
witness. It has no bearing on any of the issues of
this case, what he knew, unless they lay some foun-
dation for it.

The Court: I think it may remain.

60 Joe Mazuroshy vs.

(Testimony of Frank Nelson.)

Mr. Biggs: And an exception.

During the period from 1931 until 1935 I com-
municated with Joe Mazurosky in my tnie name.
I sent the Deibert check to him in my true name
of Frank Nelson.

Mr. Dillard: Q. I mil ask you if you ever had
a conversation with Joe Mazurosky, we will say
between the years of 1929 and 1935, concerning the
means by which you made your livelihood, made
your living.

A. About the only thing that was ever said in
regard to the business was, he asked me, "How are
the suckers, Slats? Are you making any big sales?"
That was about the only conversation we had.

He asked me that several times between 1929 and
1935.

I testified before that I owed Joe Mazurosky
Twenty ($20.00) Dollars at the time I sent him
the Belter check. I borrowed money from Mr.
Mazurosky several different times. The amounts
were usually small, ten or twenty dollars or some-
thing like that. I also bought merchandise from him,
a w^atch and a few glasses — spectacles. The cost of
all these items did not rim over ten dollars. I think
the watch cost five dollars. I don't remember the
occasions when I borrowed money from Joe
Mazurosky, the particular occasions. I borrowed so
many different times from him, several dozen times,
I guess, whenever I needed money. I [58] only bor-
rowed the money from him in Portland. We took
one trip together in 1931, the only trip I ever took

United States of America 61

(Testimony of Frank Nelson.)

with him. We went some place in AVashing-ton ; I
don't remember where it was, I was pretty well
under the influence of liquor and we stayed three
or four days. I had a chauffeur at the time and we
went in his car with other parties. Others who were
in attendance went in their own car. It was a pleas-
ure trip and I paid the expenses.

Cross-Examination
By Mr. Biggs:

Frank Nelson is my real name. I have used sev-
eral different names, at different times and places.
I am held in the House of Correction at Milwaukee
under the name of Frank Faircloth. The House of
Correction is something similar to a penal institu-
tion. I am under sentence for a period of four
months on an indictment to which I pleaded guilty
for attempted use of the mails to defraud. The
fraud charge was resulted from the same kind of
i fraud wdth which we are here concerned.
' Other occupations I have followed include the
hotel and restaurant business. I followed this line
in Spokane and Seattle, Washington. After leaving
the army I entered the hotel business in Spokane,
lafter leasing a hotel property. I operated this busi-
iiess for about four years, up until about 1925, and
ithen I went into the eye business and have been in
the eye racket since that time. From 1911 up to
1919, I sold magazines. By eye racket, I refer to the
incidents I have just described. Since entering the
eye business, I have likewise been in the hotel busi-

62 Joe Mazurosky vs.

(Testimony of Frank Nelson.)
ness in Seattle, Washington, this for about a year
along about 1929. In 1937, I was in the hotel busi-
ness in San Francisco. Between 1929 and 1937 I
was not in the hotel business, or other kind of busi-
ness except the eye business. I occasionally do some
gambling. I have never been interested in promot-
ing oil ventures or anything of that kind, nor did I
have an connection with the caravan business. [59]
I studied optometry in Spokane for two years, 1923
and 1924, I think it was, and I maintained a busi-
ness in Spokane the latter part of 1924. From there
I quit the store and went into the eye racket busi-
ness and have not had a store since. I am a regis-
tered optometrist but my certificate is delinquent;
I think I let it run out.

Q. Isn't it a fact, Mr. Nelson, that during this
time since 1925 you have been convicted of other
types of offenses of the kind you have just de-
scribed ?

A. No sir.

Q. Obtaining money under false pretenses?

A. I was convicted on this racket one time at
Rockford, Illinois, and that was in 1930.

I did not keep any record of the loans I made
from the Defendant. A couple of different times I
pledged security with him, a diamond stickpin, a
watch, or something of that nature. I do not remem-
ber w^hen these transactions occurred. Ordinarily I
did not pledge any security nor give my note. Re-
ferring to the Belter check, Government's Exhibit

United States of America 63

(Testimony of Frank Nelson.)

No. 4, I owed Mr. Mazurosky Twenty ($20.00)

Dollars at the time that check was given.

Q. Do you recall on the trial before you said
that you owed him Twenty-five ($25.00) Dollars?

A. I do not.

Q. But you kept no record?

A. No, sir.

On the trial of the case at Portland, this same
ease, I recall that I testified as follows: (impeaching
question)

I have been convicted of a felony and this oc-
curred in Wyoming, I can't think of the town. The
conviction was for writing a check for Twenty
($20.00) Dollars. I wrote the check and served time
for it.

My livelihood since 1925 has been derived largely
from deceiving people. Deception is an art that I
have commercialized and I [60] have capitalized on
this for the last nine or ten years. I have developed
a technique in deception that ordinarily enables me
to deceive without arousing suspicion.

I do not recall a time when Mr. Mazurosky loaned
me Ninety ($90.00) Dollars for payment of my
hotel bill at the Heathman Hotel in Portland. I
know that he never did pay a hotel bill for me at
the Heathman Hotel.

|, Q. Or did you borrow money from him for that
purpose?

A. Yes, sir.

Referring to the Belter Check, the Five Hundred
($500.00) Dollar check from which I testified I re-

G6 Joe Ma^urosky vs.

(Testimony of H. F. Belter.)

that there has been no sufficient foundation to show

that this defendant had anything to do with it.

The Court : The objection is overruled.

Mr. Biggs: An exception.

Q. I vdsh you would go ahead and tell us how
you happened to make out that check payable to
that Mr. Adams?

Well, one of the two parties was represented to
me as Dr. Miles. Adams examined my eyes and
said, "You have got a cataract [62] on your eye;
that is the trouble with your sickness." This oc-
curred right in my home. They said they were doc-
tors and that they could cure me. When Adams
came in he had a glass that he put on my eyes and
tested them. My right eye was all right and my left
eye wasn't, so he says, "I have got a doctor in the
car here; his name is Miles, and he can take that
cataract off of your eye and you \W11 be all right, V
so I thought it was better having it taken off as
being sick all the time. So they went at it. They put
a towel over my eye and they had a dropper and
they put stuff in my eye, dripped it in there. He
took something out of my eye, I don't know what.
I saw it and it looked like white skin.

I paid them Three Hundred ($300) Dollars cash
and the}" took me to Kennemck in their car and I
went to the bank and asked the president about the
money. The banker told me I would have to wait
eight or ten days for the money ; this was on the 12tli
of September. After the twentieth they got their
money because the check came back to tlie bank and

United States of America 67

(Testimony of H. F. Belter.)

I got it out of the bank. They remained in their
car while I went in the bank. I told them that the
check would be good in a few^ days. I have seen both
of these men since on a photograph. I have seen one

: of them personally, and I am referring to that big,
slim, tall fellow, black hair, dark in his face. Tlie

j man I have just described was not known to me as
Adams, but as Dr. Miles. Adams told me his name
was Miles.

(No Cross Examination)

I MES. H. F. BELTER

I was thereupon produced as a witness in behalf of the
I United States, and, having been first duly sworn,
i was examined and testified as follows :

I Questions by Mr. Dillard :

j I am Mrs. H. F. Belter, the wife of the w^itness
.who has just testified. I have heretofore seen the
I Exhibit 4 for identification, the check, but did not
see it at the time it was made out. He made it out
!at the bank. I was present when an operation was
performed on my husband to remove a cataract or
i something from my husband's eye. There were two
I men there at the time the [63] operation was per-
formed. I don't remember the names they used.
Since that time, I have seen the one who is tall and
black. The tall, dark man is here. I did not know
these men by their names when they performed the
loperation.
I (No Cross Examination)

68 Joe Mazurosky vs.

HENRY WAGNER

was thereupon produced as a witness in behalf of
the United States, and, having been first duly sworn, i
was examined and testified as follows:

Questions by Mr. Stray er: j

My name is Henry Wagner and I live eight miles
east of Vancouver, Washington, on a farm. I have i
a brother, William Wagner, who lives with me. I
will be seventy-five next month, about two weeks
from now. I have examined the check, Exhibit 7,1
which you have handed me and will state that it^
bears my signature. The check is made payable to
O. A. Plmnmer and I made it out on November 14, |
1925.

Q. Mr. Wagner, will you just tell the jury the
circumstances under which you made out and de-
livered that check?

Mr. Biggs: If the Court please, we object to the
introduction of this testimony on the gromid that \
it was to do with a transaction in the absence and
not in the presence of this defendant, there being no
sufficient foundation made connecting the defendant
with the transaction or showing knowledge of the
transaction.

The Court: The objection is overruled.

Mr. Biggs: And may we have an exception?

The Court : Exception allowed.

Mr. Biggs: Could a continuing objection to this
testimony go on. Your Honor, to prevent the neces-
sity of constant interruption ? [64]

The Court: You will have to object to the testi-
mony of each witness.

United States of America 69

(Testimony of Henry Wagner.)
• Mr. Biggs: But it may be a continuing objection?
The Court: As far as the testimony of the par-
ticular witness.

Mr. Biggs: Thank you.
' There were two men came to my farm on the 14th
day of November, 1925, who said they were eye
, doctors that tried to sell us glasses. I wasn't in need
: of any glasses, but my brother, William, did need
I them ; his eyes were failing and they examined his
1 eyes and discovered that there was something
I wrong and finally found it was a cataract^ — told him
I it was a cataract, and said that it would have to be
removed or else he would go blind, and so he sub-
; mitted to the operation to remove that imperfec-
i tion in his eye. Before they did that I asked them
: what it would cost to remove it and they said it
I would be nominal, the price would be nominal, and
so they went to work and removed it and when they
I got through the bill was Seven Hundred Fifty
'($750.00) Dollars.

They had an instrument about a foot long, a sort
of rod, and they worked aroimd in his eye wdtli that
and removed something that looked like the white
of an egg, and they called that the cataract. That
was the operation that was performed. These parties
were using the names of Dr. O. A. Plummer and
Dr. J. C. Ainsworth. Mr. Plummer was a tall, slim
:man, rather dark, about 35 or 40 I should judge. I
believe I saw him today. The other wasn't near as
tall, was older, heavy set with a sloping forehead at
la conspicuous angle. The older man performed the

70 Joe Mazurosky vs.

(Testimony of Heniy Wagner.)
operation. When they said they wanted $750.00 I
objected. They said radium was used to remove the*
cataract and that the value [65] of the radium used
in the operation was Six Hundred Fifty ($650.00)
Dollars. They reduced the bill to Six Himdred
Fifty ($650.00) Dollars and I wrote out two checks, i
this one and another for One Hundred Seventy-five '
($175.00) Dollars, making a total of Six Hundred
Seventy-five ($675.00) Dollars. The checks were*
handed over to Dr. Plummer. I did not see them j
after I delivered the checks. One of the checks was
cashed, the $175.00 one. I next saw the $500.00 check
at Mr. Dubois' in the Bank. After these men de-
parted with the checks, I went over to Portland.
Oregon, to question one Joe Mazurosky who pre-
sented the check for payment at Vancouver to find
out the whereabouts of those two eye doctors, and
Mr. Mazurosky told me them fellows were loggers i
and he had sold them a watch and merchandise to (
a certain amount and gave them the balance in
money. That is the way he come to get this check. I
don't think he had the check when I talked with
him. I asked him where those fellows were that he
had sold the watches to and he said he thought they
were around Portland. He told me he knew one of
them for a number of years. I don't remember
which one of them it was he said he had known
for a number of years. I talked with Mr. Mazurosky
because I wanted to get on the trail of those eye
doctors. Since he had the check, I thought he might
know where they were. He said he didn't know

I United States of America 71

I (Testimony of Henry Wagner.)
I where they were but thought they might be around
{ Portland. I don't know that he offered to aid me in
finding them. I then went to the Deputy Sheriff at
i Vancouver and we went together to see John Goltz
[ in Portland. About two weeks after that I talked
' with Mr. Mazurosky at his place of business and he
I told me it was too bad I had been swindled, and
'■ that he had been swindled too the same way. I
I don't know all that was said in the conversation. I
I believe we did discuss the matter in a general way
j f or some time. I don't remember any details about
I his statement of being swindled. I \_'oQ'\ made no
agreement with Mr. Mazurosky about what was to
I be done with the check, whether it was to be paid
or not. The check has not been paid. About No-
vember 26th, 1925, about two or three weeks after
'the eye doctors were there, I went to Spokane to
! locate the eye doctors. I did not succeed in locating
'them. While in Spokane, on November 27, 1925,
I there was a person boarded the train just as it
pulled out for Portland that looked very much like
Joe Mazurosky. The operation on my brother's eye
; accomplished nothing.

I Cross Examination

Questions by Mr. Biggs :

I am not sure that it was Mr. Mazurosky that I
saw in Spokane. I just got a side glance of the
party as he boarded the train. I did not make any
investigation to determine if it were he. I would
rather believe that it was not Mr. Mazurosky; that

72 Joe Ma^uroskij vs.

(Testimony of Henry Wagner.)

I was mistaken. Mr. Mazurosky told me the men

were loggers after I had come back from Spokane.

Q. When this case was on trial before Judge
Fee in Portland in the Federal Court do you re-
member your testifying in response to this ques-
tion: "Well, what did he tell you? Answer: He told
me they were locals, that he had sold them merchan-
dise to the extent of over one hundred dollars and
paid them the balance in money."

A. Yes.

WILLIAM WAGNER

was thereupon produced as a witness in behalf of
the United States, and, having been first duly
sworn, was examined and testified as follows:

Questions by Mr. Strayer:

My name is William Wagner, brother of Henry
Wagner, and we live near Vancouver, Washington.
I recognize the check you have handed me. Ex-
hibit 7 for identification.

Q. Do 3^ou recall the circumstances under which
that check was made out and delivered ? [67]

A. Yes, sir.

Q. Will you just tell the jury about it?

Mr. Biggs : If the Court please, for the purpose of
the record we object to the introduction of this tes-
timony on the grounds assigned with respect to the
testimony of the brother.

The Court: The objection is overruled.

United States of America 73

(Testimony of William Wagner.)

Mr. Biggs: And that will go to all the testimony
on the further ground of remoteness?

The Court: Overruled. Exception allowed.

Mr. Strayer: Q. Tell us the circumstances
under Avhich your brother made out and delivered
that check.

Well, this check was written for eye doctors.
There were a couple of them, Plummer and Ains-
worth, and they examined our eyes and told me I
had a cataract on one of my eyes and if it wasn't
removed I would go blind in a short time. It scared
me, of course, and it scared my brother, and we is-
sued this check in payment for the operation. The
check was made out by my brother in my presence.
The check was delivered to Plunnner. The check
was never paid. I have seen neither of the men since
then. The operation didn't help ''one bit."
(No Cross Examination)

JOHN GOLTZ

was thereupon produced as a witness in behalf of
the United States, and, having been first duly
iworn, was examined and testified as follows:

iQuestions by Mr. Dillard :

; My name is John Goltz and I am a city detective
of Portland, Oregon. I have been connected with the
Police Department for 34 years. I was serving as a
letective during the years, 1925 and 1926. I know
:he defendant in this case and had occasion to talk

74 Joe Ma^uroshy vs.

(Testimony of John Goltz.)

mth him in the year 1925. On the morning of No-
vember 23, 1926, Deputy Sheriff Andrews of Van-
couver and Mr. Henry Wagner came to [68] our
office. The deputy sheriff informed me that he had
a warrant for two men who represented themselves
as doctors ; one, O. A. Phimmer and the other, J. C.
Ainsworth, and that Mr. Mazurosky would know
them so we drove to his place and inteiwiewed him.
He said, ''Yes, I know them fellows", and we ques-
tioned him about a check. We asked him if he knew
about a Five Hundred ($500.00) Hollar cheek and
he said, "Yes, they bought One hundred six
($106.00) Dollars worth of jewelry from me and
gave me the check and I gave them the balance in
cash." Mr. Mazurosky gave us a description of the
men. He described O. A. Plummer as a man about
fifty years of age, rather heavy set, five foot eight
tall, 180 or 190 pounds, thin gray hair, gray
mustache, broad shouldered, forehead sloping back,
wore a large diamond in his shirt. Mr. Mazurosky
told us that O. A. Plummer goes to the logging
camps, make the logging camps.

Cross Examination

By Mr. Biggs :

Mr. Mazurosky told us Plummer was a gambler
and that he makes the logging camps. He gave us a
description of Plummer and also of the other man
known as Dr. Ainsworth. He described Plummer as
a man about six feet one, 30 to 35 years old, slender
built, and had hair, a pretty good set of hair, nose

United States of America 75

(Testimony of John Goltz.)

rather long, hair rather thin. The description I
have just given was gotten from Mr. Maziirosky
and Wagner together. They were both together
when the description was given me. I got both of
the descriptions from Mr. Mazurosky. That was on
the occasion of my first visit to him.

^! ERNEST C. DEIBERT

was thereupon produced as a witness in behalf of
the United States, and, having been first duly
sworn, was examined and testified as follows:

I By Mr. Dillard:

My name is E. C. Deibert and I live at Rockford,

I Washington. [69] The Exhibit 5 for identification

which you have handed me bears my signature.

I i After making out the check, I gave it to those eye

'doctors. I had Fifty ($50.00) Dollars in the bank

;and they wanted me to pay them right away and

they thought I had the money in the house and they

were squeezing me; they wouldn't go out of the

house until I paid them. They made me go with

them in a car to draw the money and pay them.

Q. How much did you draw?

A. I had this fifty dollars cash in the bank, and

,when they examined my eyes — I was on the job and

'the short fellow, the eye doctor — the car barely

stopped and he w^as out of the car and running for

me, and right away he says, "How is your eyes?"

"Oh", I says, ''they are fair." Of course I had

76 Joe Mazuroshy vs.

(Testimony of Ernest C. Deibert.)

Mr. Biggs: If the witness will excuse me, if the
court please, I want to put the same objection in
the record as to this witness that has been put in
as to the others, in that the defendant was not per-
sonally present and there is no testimony sufficient
to connect him with it.

The Court: Objection overruled and exception
allowed.

Mr. Dillard: Go ahead, Mr. Deibert.

He looked at my eyes right away and he told me
I had poor eyes, and so he kept on talking and he
wouldn't give me even a chance to answer him, he
talked so fast. He wanted me to go with him in the
house. I didn't care to go Avith him in the house, but
finally he made me; I had to go with him in the
house and then I had to sit down in a chair and he
examined my eyes, and about three weeks before I
had glasses fited to my eyes at Sears & Roebuck,
He says he can cure my eyes. My \viie asked him
what he would charge. ''Well", he said, ''Examina-
tion is free", and then he says he has got Dr. Pierce
in the auto and he can cure [70] them, and he called
him in. He put his overcoat over my neck and my
face, and then my wife says, "Let me see what yon
put in." "Oh, nobody can see that." Then he took
something out of the eye. She wanted to see that
but he wouldn't let her. "Well", he said, "I am
going to charge you Three Hundred Fifty ($350.00)
Dollars." My wife says, "I thought it was free."
"Well, curing you ain't free." He said it would cost
a whole lot more if I had to go to Seattle or Tacoma.

United States of America 77

(Testimony of Ernest C. Deibert.)

I tliought everything was honest, so we agreed and

he took me to Rockford and I drew the Fifty

($50.00) Dollars and in addition I gave him a

check for Three Hundred ($300.00) Dollars. A few

days later, Mr. Goldman, of the bank, called me up

inquiring to know where to send the Three Hundred

($300.00) Dollar check and my wdfe told him not to

send it. The fellow that put the stuff in my eye gave

his name as Dr. Pierce ; said he had an institution

in New York and one in Seattle or Tacoma. I saw

the tall fellow at the Court House in Portland and

; that is the only time I have seen him since. I will

j be seventy-eight next May. I have always been a

t farmer. After executing the check I gave it to these

i eye doctors.

(No Cross Examination)

o. A. powe!ll

was thereupon produced as a witness in behalf of
the United States, and, having been first duly
sworn, was examined and testified as follows:

By Mr. Dillard :

My name is O. A. Powell. I am of the Portland
Police Department and have been so identified for
over 22 years. I have been a detective for over
I seventeen years. I was so employed during the year
1 1935. I have examined the Government Exhibit 5
for identification which you have handed me and
state that I have seen a photograph of a check

78 Joe Maznrosky vs.

(Testimon}^ of O. A. Powell.)

which looked very similar to this one with the name
of Deibert on it and in the amount of [71] Three
Hundred ($300.00) Dollars. It was drawn on the
same bank.

I know Joe Mazurosky and had a conversation
with him about a check similar as to maker, amount,
and date to the one you have just sho\Mi me. I think
it was about the 20th of December, 1935. I was fol-
lowing up a letter that our office had received from
the Sheriff at Spokane, Washington, I believe, and
I went to Mr. Mazurosky 's place of business and
asked him about the check and about wlio this man
Adams was to get him identified. Mr. ]\Iazurosky
said that he had known Adams in a w^ay for about
sixteen years but really didn't know his right name,
but he w^as known as Slats, that he had been around
Dr. Brown in that neighborhood years before and
he knew him as Slats.

Q. Did he say to you what this man Slats' occu-
pation was ?

A. He said he was an eye specialist, is the way
he described him.

We did not locate the man ** Slats" at the time.
Mr. Mazurosky was unable to tell us where he was
or w^here he could be fomid. The check had been de-
posited at that time at the Bank of California and
we were at the Bank and talked with the cashier be-
fore going down to talk with Mr. Mazurosky.

Q. Did Joe Mazurosky make any statement to
you as to how the check hapened to come into his
possession %

United States of America 79

(Testimony of O. A. Powell.)

A. Well, I can't say on this particular check. I
could say a statement generally made. He said those
men often run a little account, maybe borrow a
little money of him at times, but I wouldn't say on
this particular check. I don't recall discussing with
Mr. Mazurosky whether he received the check per-
sonally or through the mail.

(No Cross Examination)

W. E. WILLIAMS

was thereupon produced as a witness in behalf of

the United States, and, having been first duly

I sworn, [72] was examined and testified as follows:

^By Mr. Dillard:

! My name is Williams and I am a detective of the
i Portland Police force. I have been in the depart-
!ment about 22 years, and have been a detective for
16 years. I was serving as a detective in the year
1935. I had occasion to interview the defendant in
> company with Detective Powell. I have examined
Government's Exhibit 5 for identification which
you have handed me and state that I have seen a
jphotograph of a check similar as to amount, date
and name of drawer. We talked with Mr. Mazurosky
about a check like the exhibit. Detective Manciet
had a check and we were assigned to the case and
we went and talked to the banker about the check,
and from there w^e went dowTi and talked to Mr.
Mazurosky as to the description of the man who

80 Joe Ma^uroshy vs.

(Testimony of W. E. Williams.)
gave it to him and everything like that. He said he
didn't know the man's name; he had known him
for about sixteen years. He was referring to the
man whose name appeared on the check as
''Adams", he said he came to the store and asked
him to cash the check and he refused to do it; he
said he would put it through the bank for him, and
he didn't know whether it was any good until we
told him it came back. He said they called the party
''Slats" and he worked with Dr. Bro^^^l about six-
teen years ago in the eye specialist bunk as far as
he knew.

(Cross Examination)
By Mr. Biggs:

I made some notes of the conversation. I think I
probably have them with me.

GLENN HARMS

w^as thereupon produced as a witness in behalf of
the United States, and, having been first duly
sworn, was examined and testified as follows:

By Mr. Dillard: [73]

My name is Harms and I am Police Identifica-
tion Officer and Photographer of the Portland Po-
lice Department. I was so employed in 1935. I have
examined Government's Exhibit 5 for identification
which you have handed me and state that it is the
back and front of a check that I photographed on
or about December 12th, 1935. The check was

United States of America 81

(Testimony of Glenn Harms.)

brought to me by Detective Manciet of the check

detail. I produced and have the original film of the

check. (Produces original film.) The two films just

handed you represent the front and back of the

check.

(The two photographic films were thereupon
marked Government's Exhibit 26 for Identi-
fication.)

The film and photograph turned out to be a correct
representation of the original check. After photo-
graphing the check, I returned it to Mr. Manciet.

L. D. MANCIET

was thereupon produced as a witness in behalf of
the United States, and, having been first duly
sworn, was examined and testified as follows:

By Mr. Dillard:

I I am a detective of the Portland Police Depart-
I ment and was so engaged in 1935. I have examined
Government's Exhibit 5 for identification, which
you have handed me, and state that I had such a
check as the photograph depicts in my possession.
' That w^as about December 10th and 11th, 1935. I
obtained the check from the Bank of California,
[ Portland, of which this is a facsimile. The original
I bore the same endorsements on the back at that time
' as it now bears. Thereafter, I took the check to Po-
lice headquarters and had it photographed by
Fingerprint Expert Harms. I then returned the
! check to the Bank of California.
j (No Cross Examination)

82 Joe Mazuroshy vs.

Mr. Dillard : If Your Honor please, we will offer
in evidence Government's Exhibits for identifica-
tion 4, 5, 7, and 26.

The Court: Any objection? [74]

Mr. Biggs: If the Court please, the defendant
objects to the introduction of these checks on the
groimd and for the reason that there has been no
evidence sufficient to connect the defendant with the
manner and method and means by which these
checks were taken or for any other purpose, and I
assume they would be immaterial if they were not
offered for the purpose of connecting the defendant
with that transaction; as to Exhibit 7, on the
further ground and for the further reason that it
is in connection with a transaction occurring more
than thirteen years prior to the date of the offer,
and upon that ground it is too remote to have pro-
bative force.

The Court: All these checks have the defendant's
signature and they are admissible in evidence. Ad-
mitted. Exception allowed.

(The dociunents heretofore marked Govern-
ment's Exhibits 4, 5, 7, and 26, respectively, for
Identification were thereupon received in evi-
dence.)

United States of America 83

HENRY WAGNER

was thereupon recalled as a witness in behalf of
the United States, and, having been heretofore duly
sworn, was examined and testified further as
follows :

By Mr. Strayer:

When I testified on yesterday, I mentioned a con-
versation I had with Joe Mazurosky about the check
I signed (November 14, 1925) and which was de-
livered by me to the man that performed the opera-
tion. When I talked with Mr. Mazurosky I told him
the method that was employed; I told him about
the operation.

(Cross Examination)

By Mr. Biggs:

I don't remember whether I told about this on
the preceding trial.

LLOYD DUBOIS

was thereupon produced as a witness in behalf of
the United States, and, having been first duly
sworn, was examined and testified as follows: [75]

By Mr. Strayer:

My name is Lloyd Dubois and I reside at Van-
couver, Washington. I am president of the Wash-
ington National Bank and have been its president
since 1912. In 1925 and 1926 the bank was known
as the Washington Exchange. I recognize the check
you have handed me. Exhibit 7, signed by Henry
Wagner. I first saw the check just about closing

84 Joe Mazurosky vs.

(Testimony of Lloyd Dubois.)

time one Saturday, NoA^ember 14, 1925. It was pre-
sented by a gentleman I didn't know. I questioned
him about it, and it being a large check I didn't
want to take any chance on it, and some of the an-
swers that he gave me were not satisfactory, so I
certified the check and told him he could deposit it
in his own bank when he got home. The man left
with the check. My certification thereon said, ''Good
for $500 when properly endorsed", signed by my-
self. It was probably a few days later the check
came back to us, I think through the United States
National which was our correspondent bank at that
time. It was returned to us through the regular
mail. It was sent through the regular collections.
Upon receiving the check back, I stamped it "Pay-
ment stopped" and returned it. Payment had not
been stopped until I stamped it so. I stopped pay-
ment on the check because on Monday morning
when I came to the bank, I met Mr. Wagner and
he told me the circumstances imder which it was is-
sued. It was brought over by Judge Stapleton and
I told him I didn't think it was properly endorsed.
That is what the certification demanded, and so he
took it back with him. I told him they could bring
the gentleman over if they had him over there and
we thought w^e could properly identify him if it
was properly endorsed, and so he took it back with
him and later on he brought it back and gave it to
us. Judge Stapleton brought it over just a few days
after I had stopped payment on the check. Judge
Stapleton was a practicing attorney in Portland at

United States of America 85

(Testimony of Lloyd Dubois.)

j that time. His purpose in coming to the bank was

to demand payment on the check and he did so. The

[76] check was never paid to Phimmer or

Mazurosky. It was finally paid to Mr. Wagner.

I After we got the check back we gave Mr. Wagner's

account credit for it. Mr. Stapleton brought the

j check back and turned it over to us. I just rather

! gather from these endorsements that we must have

; had it twice before he brought it back. They evi-

i dently tried it again. I can't tell from the endorse-

i ments the dates that it came back to me through

i the mail. They are very badly blurred.

(Cross Examination)

By Mr. Biggs:

The Mr. Stapleton I referred to is now a Cir-
cuit Judge in Multnomah County, Oregon. I do not
know, but I presume he was acting in behalf of Mr.

' Mazurosky at the time as his attorney. He asked me
why I didn't pay the check. I had certified the

I check and then gave it back to this man Plummer.

• The effect of certifying a check by a bank is to give

i notice to whoever might take the check that the
check is bonafide; that it is good.

86 Joe MaznrosUy vs.

JOHN M. GRAY

was thereupon produced as a witness in behalf of
the United States, and, having been first duly
sworn, was examined and testified as follows :

By Mr. Strayer:

My name is John Gray and my present place of
residence is Texas Penitentiary. My age is thirty-
six. I recognize the check you handed me, Exhibit
No, 1 for identification. This check came into my
possession about October 29, 1934. The check is
made out in my handwriting and is signed by Mrs.
Mershon, I believe. I received the check while at
some little towTi above Arlington, Washington.
There was with me at the time a Mr. T. A. Andrews
who was working with me in the so-called eye
racket. After receiving the check I brought it back
to Seattle and I gave it to Roy Martin, an associate
of mine in the eye racket. Martin had sent me to see
the Mershons. Roy Martin went by the name of [77]
Dr. Miles, and Pierce, and many other names, but
he went this particular time under the name of
R. E. Terrell.

After delivering the check to Martin, I didn't see
what he did with it; only in conversation is all I
know. My conversation with him is all I know about
it. I didn't see what he did with the letter after he
prepared it. I received the proceeds of the check
from Mrs. Roy Martin in Portland, Oregon. By
prearrangement with Roy Martin, I was to take
Mrs. Martin down to Joe Mazurosky's place of busi-
ness and she was to get this money and I was to
take my share of it. Mrs. Crangle and Mrs. Martin,

United States of America 87

(Testimony of John M. Gray.)
T. A. Andrews, and mj^self and my wife all arrived
in Portland the same day, and Mrs. Martin and
mjyself got in a taxicab and drove to the business
establishment of Mr. Mazurosky and I sat there in
the cab and she went in and came back out and she
had some money. I saw her go in and talk to some
one inside and they went back in the back and in a
few minutes she came back out and said she had the
money and we went back up to the President Hotel.
The check is for Four Hundred Fifty ($450.00)
Dollars. When we got back to the hotel, I received
the -amount of this check less fifteen (15%) per cent
and less twenty-five (25%) per cent.

Mr. Strayer: Q. Do you know what the fifteen
per cent was deducted for?

Mr. Biggs : If the Court please, we

The Court: You can cross examine.

The Witness: Shall I answer the question?
I The Court: Yes.
I A. Fifteen per cent

Mr. Biggs : Just one minute. Will the witness an-
swer whether he can say 'S^es" or ''no", and then
I may want to object.

The Court: Answer "yes" or ''no".

The Witness: Ask the question again please.

Mr. Strayer: Q. Do you know what the fifteen
iper cent was [78] deducted for?

A. Yes, sir.

Q. What was it deducted for?
I Mr. Biggs: If the Court please, I object to that
unless the witness can say from his personal knowl-

88 Joe Macuroshy vs.

(Testimony of John M. Gray.)

edge what that was. He may be relying on hearsay

or something else.

The Court : Yes, I think the preliminary proof is
sufficient, but I think you had better find out the
sources of this answer.

Mr. Strayer: Q. Now you say that you and Mrs.
Martin went down to Joe Mazurosky's place of busi-
ness. Did you know Joe Mazurosky at that time?

A. No, sir.

Q. Did you see the man that Mrs. Martin talked
with in Mazurosky's place?

A. Yes, sir.

Q. Do you know who that man was?

A. Well, I understood it was Joe Mazurosky.

Q. Well, do you Iniow who it was now ?

A. I think it was Joe Mazurosky.

Mr. Biggs: I move that that be stricken.

The Court: Overruled. Just a moment; when yoti
say you think, you mean you believe that you now
recognize as the defendant the man that she talked
to, or wliat do you mean?

A. The fact of being his place of business and
the man being about his height, I would be of the
opinion that it was him. I wouldn't swear that it
was; I couldn't positively identify him as the man
that she went in and talked to ; I only think so.

Mr. Biggs: I renew my objection, if the Court
please.

The Court: Overruled.

Mr. Biggs: An exception.

The Court: Exception allowed. [79]

United States of America 89

(Testimony of John M. Gray.)

The man that Mrs. Martin talked with in the
Store was behind a coimter.

By Mr. Strayer:

Now going back to Seattle, Mr. Gray, at the time
you delivered this check to Mr. Martin why did
you deliver it to Mr. Martin"?

A. For him to get someone to cash the check.

Q. Do you know why Martin sent the check to
Joe Mazurosky?

Mr. Gallagher: That calls for a conclusion. Your
Honor.

Mr. Strayer : I guess I assumed a fact that is not
in evidence.

Q. I will ask you now, do you know through
conversation with Martin what was done with the
check?

Mr. Biggs: If the Court would instruct the wit-
ness to answer these preliminary questions ''yes"
or "no" then my objections would not be premature.

The Court: You may answer if you had a con-
versation. Answer "yes" or "no".

A. I had a conversation with Martin, yes, sir.

Q. Do you know from that conversation what
was done with the Mershon check %
\\ Mr. Biggs : If the Court please, we object to that
as calling for a conclusion.

The Court: Answer "yes" or "no".

A. Yes.

Q. What did Martin tell you as to what he had
done with the Mershon check?

90 Joe Ma^uroshy vs.

(Testimony of John M. Gray.)

Mr. Biggs: If the Court please, we object to the
witness answering that question on the ground that
it would be hearsay, there being no sufficient or any
prima facie showing of any partnership in crime
or otherwise between Mr. Martin and Mr. Mazur-
osky, and therefore no sufficient foundation laid for
the introduction of any statements, declarations, or
evidence of any acts of omission or commission done
in the absence and out of the presence of the de-
fendant. [80]

The Court: The objection is overruled.

Mr. Biggs : And may we have an exception ?

The Court : Yes.

A. My conversation with Roy Martin was that
he mailed the check to Joe Mazurosky.

Mr. Strayer: Q. And did he tell you anything
about the arrangement with Joe Mazurosky ?

Mr. Biggs: If the Court please, may we make the
same objection and have the continuing objection to
any testimony asked for and given by this ^vitness
in connection wdth statements or evidence of facts
or declarations on the part of Martin?

The Court : Yes.

Mr. Biggs: I make the same objection at this
time, Your Honor.

The Court : The objection is overruled.

Mr. Biggs: And may I have an exception?

The Court: An exception is allowed.

Mr. Strayer: Q. What did he tell you?

A. It would cost me fifteen per cent (15%) to
get the check cashed through Joe Mazurosky.

United States of America 91

(Testimony of John M. Gray.)

As I previously stated, my arrangement with Mrs.
Martin was that she would go with me down to Joe
Mazuroskj^'s and we would obtain this money and I
would take my part of the money and Mrs. Martin
was to keep his part of the money.

Q. And under your agreement with Martin what
percentage of the check were you to receive?

A. I received a total of sixty (60%) per cent.

Q. And what was to be done with the balance of
the money?

A. Fifteen (15%) per cent w^ould go to Joe
Mazurosky for collection, twenty-five (25%) per
cent to Martin and Cragle, and sixty (60%) to
Nelson and myself.

I We were pa^dng Martin and Crangle twenty-five
(25%) per cent for advance information concern-
ing these people. [81]

j Referring to the time when I received the
Mershon check on October 29th, after having a con-
|versation probably one or tw^o days previous to that
Iwith Mr. Martin and Mr. Crangle they told me cir-
cmnstances of a fake cataract operation on Mrs.
Mershon, or Mr. Mershon, one or the other of them.
I went to the home of these people on this date and
oiade an examination of the party that was sup-
posed to be operated on, I don't recall which one
aow. I remember explaining that I was there for
the purpose of giving them back the money in the
isvent that it wasn't cured, that the doctor that
operated on them had had an accident of some kind
md probably was killed; any-how, after my exami-

92 Joe Mazurosky vs.

(Testimony of John M. Gray.)
nation I told them it wouldn't be cured without the
use of a radium belt and explained to them a
radium belt was very valuable, only twelve of them
in the United States; the doctor that made them
had died with the secret. The windup of the conver-
sation was that they deposied this amoimt of money
with me as surety, one of these belts to be delivered
to their home and used for a period of tliirty days,
and that is how I obtained the check.

To my knowledge there was no such thing as a
radium belt. There was nothing more the matter
with these people than senility or old age. At the
time I talked with them I was using the name, Dr. i
Pierce. I also went by the names of Miles, Hamil-'
ton, Howard, Clayton, Cox and others. I understood
that the name T. A. Andrews was the correct name
of the party who was with me. He also went by the ;
name of Thomas, Judge Thomas, and I so intro-j
duced him to the Mershons. I represented Thomas
as an attorney, settling the estate of the doctor who j
had been killed and who had performed the opera-
tion on their eyes. Thomas is at this time in a Fed-
eral penitentiary in Virginia. I understand Roy
Martin and Herbert Crangle arc in the Federal
penitentiary at Atlanta, Georgia. [82] Crangle usu-
ally went by the name of Dr. Avery. Martin, when
performing the operations, usually was represented ;
as Dr. Miles.

Referring back to the time when I received the
proceeds of the Mershon check, I will state that I
met Mr. Mazurosky about a week thereafter, for the

United States of America 93

(Testimony of John M. Gray.)

first time. I was introduced to him by Roy Martin

at the St. Andrews Apartment Hotel in Portland,

Oregon.

Q. And what were you doing there at the St.
Andrews Apartment Hotel?

A. Mr. Martin was living there at the hotel. I
was do^vn there to see him and I just met Mr.
Mazurosky, that is all.

The Allen check, Exhibit 3 for identification,
which you have handed me w^as received by me
sometime in September, 1934. I w^nt to the home of
Clara Allen and her brother somewhere aroimd
Boulder, Colorado. The Exhibit is a cashier's check.

Mr. Strayer: Q. And how did you receive pos-
session of it ?

Mr. Biggs: If the Court please, do I understand
that my objection goes to all this testimony, there
being no showing that the defendant was present
there at the time and it being statements and acts
of persons outside of the presence of the defendant ?

T. A. Andrews and I drove to the home of Clara
Allen and her brother, out of Boulder, Colorado,
and I talked to Miss Allen and her brother and per-
formed a so-called fake cataract operation on the
brother's eye and went to to\^^l to get this money.
She drove her car and we followed in another car.
She didn't have the money in the bank. They had
some Liberty bonds and these were at the bank in
the name of the brother and she couldn't obtain
these bonds, so she had to go back home and get an
order for them, and it was then too late to get the

94 Joe Maznrosky vs.

(Testimony of John M. Gray.)
bonds out of the [83] bank that day so I instructed
her to go the following day and get the bonds or the
cash money and I would be back in a few days to
get it, but I didn't. I waited a couple of weeks and
I sent Mr. Andrews out there early on Sunday
morning. That day he returned with the check and
gave it to me. I received the check from T. A.
Andrews about twelve or fifteen days after the date
noted on the check. I was working with Andrews at
that time.

I performed the operation on Miss Andrews'
brother. Due to senility, his ^dsion was dim and I
explained to him that I could make him see with
radium treatment. I dropped a few drops of Murine
eye water into his eye and removed a i)iece of skin
that I had — I was supposed to have removed it—
and that was all there was to it. He did have n
cataract but I did nothing about it. The check was
given me in payment for the operation. I was using
either the name of Miles or Pierce, I am not sure
which. Andrews was using the name of Thomas.
Miss Allen's brother received no benefit from the
operation. After receiving the check, I gave it to
Roy Martin. He told me he could send it to Port-
land for collection and it would cost me fifteen
(15%) per cent. He told me he was going to send
it to Joe Mazurosky. He wrote him a letter and put
it in an envelope and dropped it in a mail box in
Denver, Colorado. After he mailed the letter, I later
received the proceeds of the check. Mr. Martin gave
me Five Hundred ($500.00) Dollars less fifteen

United States of America 95

(Testimony of John M. Gray.)
(15%) per cent, which is Seyenty-five ($75.00)
Dollars, in Seattle — a few dollars less than that be-
cause he told me that the money had been wired to
him. That was about the first or second week in Oc-
tober, 1934. I went back to see Miss Allen in 1935.
When I was there the first time they had two thou-
sand dollars in Liberty bonds and I went back there
to get the balance of them if I could. I talked to
Miss Allen; found her in the cow pen milking a
cow. It was [84] early in the morning. I went in
and talked to her and she didn't recognize me. As
soon as I began to talk about eyes she told me she
had been swindled out of Five Hundred ($500.00)
Dollars and if I would go down town and talk to
the district attorney he would tell me all about it,
and so that was all I wanted to know and I drove
away. She did not recognize me as one of the men
who had been there before. I wore no disguise.

(The check. Government's Exhibit 15, for
Identification, was thereupon marked.)

The first time I ever saw the Exhibit marked
Government's Exhibit 15 for identification was at
the trial in Portland. I can't say that I recognize
;:he handwriting. When Martin sent the checks to
Toe Mazurosky, he used the name of R. E. Terrell.

Cross Examination
By Mr. Biggs :

Q. Did you see that, Mr. Gray?
1 A. Yes, sir.

I I first met Martin in 1931 or 1930. It is my under-
|jtanding that he is now in the Federal penitentiary

96 Joe Ma^urosky vs.

(Testimony of John M. Gray.)
at Atlanta. Terrell was an improvident type of
fellow. I don't know whether he ever borrowed
money from Joe Mazurosky. I did not meet Mr.
Mazurosky until a week or ten days after one of
those transactions and that was at the St. Andrews
Hotel. It was just a passing introduction and there
was no conversation. There were other people there.
Referring to the $425.00 or the $500.00 cheek, it is
my statement that $75.00 was deducted from that
check so far as I was concerned ; a few dollars over
that to take care of the cost of wiring the money
from Portland to Seattle. I don't remember how
much I received, but it wasn't $425.00. I recall that
I testified at the trial in Portland that I received
$425.00 on that check. I recall that at the previous
trial there was some talk of wiring charges. I don't
know that any one has talked with me since the [85]
other case. I was first approached regarding the case
in the summer of 1936. That was by C. W. Bulong,
Post Office Inspector, Dallas, Texas; also by Mr.
Mann, Post Office Inspector of Washington, D. C,
I have talked with no one else. I talked with Mr.
C. B. Welter, Post Office inspector for the Oregon
District in 1937. That conversation was held at the
Texas penitentiary. Mr. Welter did not take a state-
ment from me. The other men took statements. I
have been indicted on the eye racket scheme and I
pleaded guilty in Norfolk, Virginia. Sentence was
suspended on that charge for five years. I under-
stand that I will be called into court for sentence on
that charge in five years.

United States of America 97

(Testimony of John M. Gray.)
, Q'be plea I referred to was entered in 1937, after
1 1 had talked with Mr. Welter. I am under indict-
; ment in Wisconsin. I am now serving time in Texas,
1 fifteen years for assault and attempt to murder. I
lam also serving ten years for a swindle in the na-
j ture of one of these cases. I am likewise serving ten
! years on another case of grand theft, one of these
same cases, but the conviction was grand theft. That
I was at Livingston, Texas ; also ten years for swindle
lat Kaufman, Texas, and eight years at Lufkin,
I Texas. That is forty-three years all told that I am
j serving. Ten years of these sentences run concur-
Irently. I actually have to serve thirty-three years.
I believe I went into this game in 1930. Prior to
that time, I was a licensed optometrist in Fort
jWorth, Texas, from 1923 to 1930. I practiced
loptometry legitimately. I had engaged in no crimi-
'jnal activity prior to 1930. I had not been tried or
jconvicted of anything prior to 1936. Between 1930
and 1936 I did not devote all of my time to this
game or racket. I owned a restaurant in Hollywood,
jCalifornia, and operated it. I built the restaurant
in 1935 and sold it since I have been in the peni-
tentiary. Between 1930 and 1935 practically all of
'my time was devoted to the eye racket. That was
my only means of livelihood. It was my intention in
I '86] the eye racket to deceive, and mislead poor old
jpeople. I wouldn't call it robbery because it did not
Involve force. When I called upon Mrs. Mershon
and Miss Allen, I represented myself as something
:hat I was not. When I told them I could cure them.

98 Joe Mazurosky vs.

(Testimony of John M. Gray.)
I knew that I was unable to. I knew that the treat-
ment I prescribed was false and inadequate. When
I took their money, I took it knowing that I had de-
ceived them. I knew that I had not given them value
received.

I have acquired a technique effective in deceiving
people and where it has been to my advantage, I
have deceived and mislead people. I don't know
whether it is difficult for the ordinary observer to
determine when I am and am not telling the truth.
I attempted to cultivate the bedside manner, and a
fluency and art of apparent sincerity. I was fairly
successful in these matters.

By Mr. Biggs :

Q. How many persons do you think you have de-.
ceived or misled in connection with this scheme?

A. Probably a thousand.

Redirect Examination

By Mr. Strayer:

No one has made me any promises in considera-
tion of my testimony in this case. No one has told
me or led me to believe that I will receive any
special consideration for testifying. There is no con-
sideration that could be given me and I have
nothing to gain.

United States of America 99

MRS. CHRISTINE MERSHON

was thereupon produced as a witness in behalf of
the United States, and, having been first duly sworn,
was examined and testified as follows:

By Mr. Dillard:

My name is Christine Mershon and I live at
McMurray, Washington. I signed the check which
you have shown me marked Government's Exhibit
No. 1 for identification, on October 29, 1934. [87]

Q. Just tell us briefly, Mrs. Mershon, how you
happened to make out and sign that check.
i Mr. Biggs : If the Court please, may we make the
isame objection that has hitherto been made with re-
spect to statements, declarations, actions and so
; forth made outside the presence of the defendant,
I on the ground that there is no sufficient showing
that the defendant had any knowledge of this
: transaction.

Court: Objection overruled.

Mr. Biggs: And an exception, if the Court please.

The Court: Exception allow^ed.
I Mr. Biggs: May that objection run clear through
this testimony. Your Honor?

Mr. Dillard: Q. Go ahead, Mrs. Mershon, just
tell us briefly how^ you happened to make out that
check.

j Two men came to the house one day. I had an-
lother couple of men come the week before. They
told me I had bad trouble in my eyes and I would
have to go to a Los Angeles hospital for treatment.
I told them I couldn't afford that, and one of them,
Dr. Miles, said he had very good medicine in his car

100 Joe Mazuroshy vs.

(Testimony of Mrs. Christine Mershon.)
right at the door and he would test my eyes. It was
simply water; I didn't feel any pain or anything.
He poured that in and then he took a little — it
looked like the skin next to the shell of the egg. He
said that was poison. Then he said the medicine
would cost about three himdred dollars, he had to
send to Paris, France, for it, and if it cost more or
less he would bring back the change. I thought that
was too much but he says no, he would bring back
the change, and then I told him I had no money at
home; that it was in a bank in Arlington. He said
he would take me in his car do^^ii to Arlington.
Another man with them. Dr. Avery went with us
dowTi to Arlington and there the banker reluctantly
gave me the money. When I came out of the bank,
they were a block [88] below ; said they had to get
some gas or something for the car. I went down and
Dr. Miles said, ''Have you got the three hundred
($300.00) ?" and I said, "Yes", and handed him the
three hundred. They took me home, and they said
they might come ]back to see if the medicine worked,
but did not come again. The following week, another
couple came. Dr. Pierce and Judge Thomas, and
they said, "Did the medicine help you?" and I said,
"No", and they said Dr. Miles was killed in Seattle,
overrim by a car, and the last thing he said was to
return to Mrs. Mershon the Three Hundred
($300.00) Dollars she paid for the cure if she isn't
cured. He said, "I will test your eyes", and then
said, "No, it hasn't done any good, I will give you
medicine for it", and he gave his name as Dr.

United States of America 101

(Testimony of Mrs. Christine Mershon.)
Pierce. He said it would take $450.00 more to pay
the expenses. I told him I was sick and couldn't go
to the bank that day. He furnished me a check blank
which I signed. I gave it to Dr. Pierce. They told
'me the Banker would send the money as soon as I
directed him to and promised to come with an elec-
tric belt that takes the disease out of ones system.
They didn't come with the belt and didn't return
the change and that is the last I have seen of them.
We turned the cancelled check over to Mr. Welter.
jl saw Doctor Pierce outside here yesterday. (John
]M. Gray was thereupon produced in the court room.)
The man you have just brought into the courtroom
[is the Dr. Pierce that I have referred to in my
testimonv.

MISS CLARA K ALLEN

was thereupon produced as a witness in behalf of
!the United States, and, having been first duly
[sworn, was examined and testified as follows :

By Mr. Dillard:

I My name is Clara Allen and I live near Long-
pont, Colorado. I have examined Government's Ex-
[libit 3 for identification which you have handed me
imd state that it is a draft given to me by W. E.
jjrregg of Boulder, Colorado, the Mercantile Bank. I
[nade arrangements to have the bank issue it. After
■pbtaining the draft [89] I gave it to a man that
bame with this Dr. Miles. I saw this Dr. Miles the
lay that I got this draft.

102 Joe Mazuroshy vs.

(Testimony of Miss Clara E. Alien.)

Q. Tell us about it. How did you happen to see
him? I

Mr. Biggs : If the Court please, may we have the j
same objection to this witness's testimony that has '
hitherto been made, and on the additional ground
that it does not have to do with any charge set foi*th
in the indictment?

The Court: Yes. The objection is overruled.

Mr. Biggs: And an exception, if the Court please.

The Court: Allowed.

Mr. Dillard: Q. All right, go ahead, Miss Allen.
Just tell about seeing Dr. Miles.

Dr. Miles and another man came into my home on
the 12th day of September, 1934, and Dr. Miles
said that was his name ; that he came from Chicago
to Denver to treat a cancer case and this man was
an oculist and he came out into the countiy with him
to view the country, and this other man had sonje
superior kind of spectacles that he wanted to put
out in the country for an advertisement. They
wanted to examine my eyes and Dr. Miles did that
and he said I had a growth on my eyes of a cancer-
ous nature and he said he had a little bit of this
cancer medicine left that he used in Denver and
that he could perform an operation in the home if
I wouldn't say anything about it and that it would
only take a few minutes and wouldn't be painful or
anything. He performed the operation. He daubed
something in my eyes, something that looked like a
sponge and then in a few minutes he took out what
looked like a round ball and then he stretched that

United States of America 103

(Testimony of Miss Clara E. Allen.)
out in his fingers and it looked like skin. He put it
in his pocket, I expect to have for the next dupe.
Nothing was said about pay until after the opera-
tion. He hinted around to find out if we had any
bonds and I answered ''Yes", and he wanted to
knoTV if we had five hundred, and I said, "Yes",
and so he made [90] out a bill for $587.50. The
eighty-seven dollars and a half was cash. The bonds
were my brother's and he had to go over to Boulder
with us. They said they would be back in the eve-
ning for their pa}". They didn't come, but on the
23rd of September the man that was with Dr. Miles
came out and said he was a solicitor sent out to col-
lect Dr. Miles' bills, and he wanted me to pay him.
He wrote out a receipt and signed it -T. J. Cannon,
someplace in Denver. I have examined Govern-
ment's Exhibit 15 for identification and state that
that is the receipt I have testified to. I have not seen
these two men since, but there were two men that
ibelonged to the gang that came last August.
I (No Cross Examination)

MR. HERMAN H. HORACK

vas thereupon produced as a witness in behalf of
i he United States, and having been first duly sw^orn,
jvas examined and testified as follows:

By Mr. Dillard:

I am a detective of the Portland Police and have
been so employed for nineteen years. I know the de-

104 Joe Mazurosky vs.

(Testimony of Mr. Hennan H. Horack.)
fendant, Joe Mazurosky. I have examined Govern- 1
ment's Exhibit 1 and state that I have seen a photo-
graph of it before. That was around December 18th,
1934. After getting the photograph, we took the
check and went down to Mazurosky 's store on the
northeast corner of Sixth and Davis, in Portland.
I showed Mr. Mazurosky the check and talked \\'ith
him about it. The endorsement ''Joe Mazurosky"
appeared on the photograph of the check we had. T
just asked Mazurosky if he had cashed a check and
he said he had and that that was his signature. I
then told him that the check was obtained in a bunco
game, and he had told me that he didn't know how
the check was got. He told me he didn't know the
whereabouts of the party who gave it to him. He
told me that the party was a doctor. Detective
Eichenberger of the Portland Police was with me.

Cross Examination

By Mr. Biggs:

The conversation I have referred to was around
December 18th or 20th, 1934. In this conversation
with Joe I told him it was obtained in a bimco deal.
He did not tell me that it was not so obtained. He
told me that the check had come to him all right. I
remember talking with Mr. Mazurosky concerning
the identity of [91] these people ; I recall that now.
He said the party was a doctor. I recall testifj^ng
in this case before, in Portland.

Q. Do you recall my asking you on cross exami-
nation this question: "did you ask him anything
about that, did you ask him who they were, who

United States of America 105

(Testimony of Mr. Herman H. Horaek.)
gave the check to him? Did you ask him that?"
''Answer: I don't believe I did." Do you recall
giving that answer?

A. I don't recall saying that.

Q. Would you say that you had not said that?

A. I might have said that.

Q. Are the details of that conversation some-
what hazy in your recollection after the lapse of
time?

A. In going back and running this thing over in
my mind the things that will come back to you — I
have a lot of cases and you know after you get on a
case and you begin to look back at your records
these things come back to you.

Q. And that is how this has come back?

Q. Now that you think about it it is your best
judgment that at the previous trial you might have
said that?

A. Yes.

(Redirect Examination.)

By Mr. Dillard:

' I made a record at the time I interviewed Mr.
Mazurosky. We made reports of our investigation
at the time. I have seen part of the report since it
vas made. I have refreshed my recollection since
this happened in 1934 by thinking over the different
things that were said. In refreshing my memory I
iconsulted a part of the original report that I men-
tioned. I do not remember whether Mr. Mazurosky
jtold me that the check came to him in person or by
ail.

106 Joe Mazuroshy vs.

ALBERT EICHENBERGER

was thereupon produced as a witness in behalf of
the United States, and, having been first duly ;
sworn, was examined and testified as follows: '

ByMr. Dillard: [92]

I am a detective of the Portland police and have !
been so engaged for thirteen and a half years. I was
a detective in 1934. I know the defendant, Joe
Mazurosky. I have heretofore seen a photostatic
copy of the check you have handed me. Govern-
ment's Exhibit 1 for identification. About Decem-
ber 20th, 1934, I talked with. Joe Mazurosky about
it, in the presence of Detective Horack. We had an
inquiry regarding the check and from Mt. Vernon
and we asked him if he had endorsed the check and
he said that he did and that he had cashed it at the
Bank of California. We asked him how he hap-
pened to get this check for $450 and he said that a
man had purchased some goods ; that after he had
cashed the check he had given the man the balance
of the money back and kept the money that was due
him on the merchandise that was bought. There was
some discussion about the endorsements but I do
not recall that. We did not find the party who had
endorsed ahead of Mazurosky on the check.

(No Cfoss Examination)

I

United States of America 107

E. F. MUNLEY

was thereupon produced as a witness in behalf of
ithe United States, and, having been first duly
sworn, was examined and testified as follows:

By Mr. Dillard:

I I am the auditor of the Bank of California, Port-
land, and have so served for about ten years. Re-
ferring to Government's Exhibit 4, I have here in
he Court room the records of the bank concerning
chat check.

(The document was thereupon marked
I Government's Exhibit 27 for Identification.)

rhis is the original deposit slip.

(Another docmnent was thereupon produced
and marked Government 's Exhibit 9 for Identi-
fication.)

jovernment's Exhibit 9 for identification is a rec-
>rd of our Bank concerning the Belter check which
'ou handed me a while ago. We call this record a
lOllection register. I am familiar with banking
practices including the collection department.
(No Cross Examination)

DONALD G. ALLEN

'as thereupon produced as a witness in behalf of
jae United States, and, having been first duly
worn, was examined and testified as follows:

5y Mr. Dillard :

I have charge of the savings department of the
jJank of California, Portland, Oregon, and have

108 Joe Maznroshy vs.

(Testimony of Donald G. Allen.)
been so employed for 18 years. When I first started
at the bank I [93] was in the collection department.
(Two documents were thereupon produced

and marked Government's Exhibits 8 and 28, .

respectively, for Identification.)

Referring to the blue slips marked Exhibits 8, 27 1
and, 28 for identification, which you have handed
me, w411 state that No. 8 was received by my assist-
ant. There is no identification on here at all as tr
where the check was drawn on at all. The strip of
paper is a deposit tag to Joe Mazurosky's account
with the Bank of California. Exhibits 28 and 27 arc
deposit slips that were made and signed by Mr.
Mazurosky depositing this to his savings account in
our bank, the Bank of California. They all bear his
signature. You have handed me Exhibits num-
bered 1, 4 and 5. This one is a photostatic copy bear-
ing our endorsement; that went through and also
the one from Rockford.

Q. Let me ask you, is there anything on tlie blue
deposit slips, any record which enables you to iden- 1
tify the kind of a deposit that was made at the
time?

A. Yes, sir, there are except for one and that is
the one that my assistant took.

Q. Tell me about the two that you know about
then. You have got three altogether.

A. The three hundred dollar check I took in.
It bears my initial on the deposit tag, and that is
on Rockford, Washington. The five hundred dollar

United States of America 109

(Testimony of Donald G. Allen.)
check bears my initial on the deposit tag and was
I on Kennewick, Washington. The deposit tags were
; made out completely by Mr. Maziirosky, putting the
' number of the bank, which is a code with us, like
98-147 means Kennewick, Washingion; 98 is the
i State of Washington, 147 means the First N'ational
i Bank of Kennewick. That is for the benefit of the
jurors. That is our code that we have, and in all
j cases except this other one Mr. Mazurosky put them
! on the deposit tag and made the numbers. I have in
■ my hand a photograph of the Deibert check. Ex-
hibit No. 5. I remember the circumstances under
which that came into my hands when the deposit
was made at the Bank by Joe Mazurosky. Mr.
Mazurosky deposited it and asked that we send it
direct instead of through the Federal Reserve Bank,
for the reason that he wanted quick action, quick
returns on the check. Also at his request w^e put a
*'No Protest" stamp on the face of the check, which
lis very imusual in the savings department — it is
jvery common in the commercial but miusual in the
'savings because our checks are not handled in that
I way ; they are not doubted [94] at all. In this case
it was. On this check, payment was stopped and it
was returned. The drawer of the check, the Farmers
|& Merchants Bank at Rockford, stopped the pay-
Iment. Thereafter the check was returned to the
iBank of California. I can't testify to the disposi-
tion of the check. It was not charged to the account
that I know of. Mr. Mazurosky deposited that three

110 Joe Ma^urosky vs.

(Testimony of Donald G. Allen.)
hundred dollar cheek in his savings account in the
Bank. It went tlini the bank on which it was drawn
and was Tetuined with payment stopped. I can't
say whether it was charged back to his account.

Referring to the Belter check, Government's Ex-
hibit 4, we have a record of that one. Tliis check
was sent through the same way as I have explained
before. Mr. Mazurosky asked that we send it direct
to the bank because he wanted a return on it, and
it was my fault that it didn't go. It didn't go direct.
I will explain. Our checks as a rule go through the
Federal Reserve Bank unless we make a special
notation to what we call our transit department. I
am referring to the Federal Resei've Bank in Port-
land. By going through the Federal Reserve Bank
there is a delay of one day in getting returns. In
order to put it through otherwise, we put a special
notation and send it to our transit department and
it goes direct to the bank. At the request of Mr.
Mazurosk}^ we put the special notation on the check
and also a "no protest" stamp at his request. This
check was returned and I called Mr. Mazurosky up
about it and asked him if he wanted us to charge
the account and return it to him in the usual course
through the mail and he said no, that he would come 1
in and take it up. He did come in and sigTied a
w^ithdrawal slip charging his savings account :

(The withdrawal slij^ was thereupon pro-
duced and marked Government's Exhibit 29
for Identification.)

United States of America 111

(Testimony of Donald G. Allen.)
I now explain the operation of the withdrawal slip
in banking practice. It is nothing more than a re-
ceipt. It says: ''Received from the Bank of Cali-
fornia, Portland, Oregon, $500," and Mr. Maznrosky
presented his pass book, we charged his account
with this $500, and he signed the withdraAval, and in
I lieu of this we gave him this five hundred dollar
check. We returned it. Referring to the Deibert
check, I don't remember how he took it up. He came
in and signed a withdrawal for the Belter check.
jl have looked at "triplicate form, No. 9." After
;the $500 dollar check was returned, he signed a
[withdrawal for it and took it over to another de-
partment which is called the collection department
land sent it through for collection. We sent it back
to the First National [95] Bank of Kennewick,
'Washington. Referring again to the Belter check,
I we didn't through the bank channels charge it back.
fl phoned Mr. Mazurosky and he came into the bank
land signed a withdrawal for the full amoimt and
{we then surrendered the check to him, the N. S. F.
check, and we then charged his account for $500.
It showed in his savings account.

(Cross Examination.)
|8y Mr. Biggs:

I It is unusual to send a check through for col-
lection. We send them through if they are doubtful.
jWhere we know a depositor it is very unusual.
I Q. I mean for a depositor to deposit a check
for collection.
A. It is unusual, yes.

112 Joe Mazurosky vs.

(Testimony of Donald G. Allen.)

Q. You say it is unusual?

A. Yes.

Q. The bank does it every day, does it? It is a
recognized practice ?

A. Yes, we do it at the request of a customer.

AVe don't do it unless it is requested, and unless
somebody is in doubt as to the check. We do it
whenever we are requested to do it and we receive
such requests occasionally. There is a recognized
procedure for it. When the bank takes paper for
collection, or for sending it direct, we have the right
to charge for it. It is optional with us whether we
charge for it or not. We did charge Mr. Mazurosky.
The bank at Kennewick charges us and we receive
no compensation oursolves. There is a clearing house
rule giving us the right to charge according to a
scale agreed on.

(Redirect Examination.)

By Mr. Dillard:

As to the Deibert check, Mr. Mazurosky made the
request that a *'No Protest" stamp be placed on it,
that is all. The object of the *'No Protest" stamp
on a check is the fact that if it is refused by the
bank which it is drawn on, then they have a right
for suit. If they just return it to us then the person
who draws the check has absolutely no proof that
it was ever presented at the bank. That is the object
of being protested. For instance, if this check had
gone up there and they stopped payment on it, they
would have to protest it ; there is a notary fee on it.

United States of America 113

(Testimony of Donald G. Allen.)
and it would prove that the check was presented on
a certain date for payment and refused, [96] and
the statement would be made why it was refused,
either payment stopped, insufficient funds, or what-
ever it might be, but if a check goes to a bank and
, they refuse payment and send it back without pro-
j testing, then if a suit is started — it is just a proof,
and that is all, that it was presented to the bank
I and that the bank refused payment on a certain
date, but a "No Protest" stamp placed on there is
• an instruction from us that they are not to protest
I it or incur any legal fees on it at all, that we are
I willing to receive it back without that process. There
' would be a fee or charge to the depositor in case a
protest stamp were affixed. Different states carry
[ a different charge. The charges range in a varying
; schedule. It is an unusual procedure to put a "No
I Protest" stamp on a check received at the savings
! department. That is because the average depositor
1 knows that the check is good ; they are not doubtful
1 at all and there are funds here to charge it back to
if it was turned down in any way.

(Cross Examination.)

1 By Mr. Biggs :

j I believe in the state of Washington they have

either a three or four dollar protest charge and

j there is 25 cents for each notice sent. I am not

I sure as to the actual amounts. There are sometimes

! service charges in addition, and I have seen charges

as high as $8.50 for notary fees, and I have seen

them for jfifty cents.

114 Joe Mazurosky vs.

ROBERT E. GOLDMAN

was thereupon produced as a witness in behalf of
the United States, and, having been first duly swom
was examined and testified as follows:

By Mr. Dillard:

I am in the banking business at Rockford, Wash-
ington. I have examined Government's Exhibit 5
for identification, and state that I have seen an
original check of which the Exhibit is a photograph.
I know Mr. Deibert, the marker of the clieck. He
was a customer of my bank at the time the check
w^as wa^itten. There is a "payment stopped" nota-
tion on the check which w^as placed there by Miss
Mills, the cashier of our bank. I w^as present at the
time. After this notation was placed on the check,
we mailed it back to the Federal Reserve Bank in
Spokane. We put the "payment stopped" notation
on the check because Mr. Deibert had come into
the bank sometime in November and asked to bor-
row some money, saying that he was getting his
eyes cured, and he asked me to fill out a note and
hold it until the check came in and then place the
note to his credit in the [97] bank and pay the
check. The check came in and I called him up that
morning, it looked kind of queer to me — and asked
him if he wanted to pay the check and he decided
he didn't want to pay it, and so I returned the
check. We received the check from the Federal Re-
serve Bank in Spokane, Washington.

United States of America 115

(Testimony of Robert E. Goldman.)

(Cross Examination.)
By Mr. Biggs:

We liave two employees in the Rockford l)ank

besides myself — the cashier, Miss Mills, and a young

fellow that works there part times. We do not liave

a stenographer. Either Miss Mills or I handle the

I correspondence. Miss Mills takes care of returning

the items and mailing the drafts to the Federal

; Reserve Banks for the checks that come in. I

; couldn't state that the check was placed in an

I envelope and deposited in the mails and returned

' to Spokane. I have no personal knowledge of the

I incident. Either Miss Mills or I take the mail down.

I may have carried it dovm. myself. I could not

I say. All of our correspondence of this kind is

I handled by mail.

I

I (Redirect Examination.)

By Mr. Dillard :

I At the time it was the custom of the bank to
always use the mails in transactions of this kind.

J. L. BLISS

was thereupon produced as a witness in behalf of
Ithe United States, and, having been first duly sworn,
was examined and testified as follows:

By Mr. Dillard:

My occupation is that of assistant cashier of the
First National Bank, Kennewick. I have examined

116 Joe Ma\zurosky vs.

(Testimony of J. L. Bliss.)

Government's Exhibit 9 for identification which you
have handed me and state that these are collection
slips, to which was attached a $500 check signed by
H. F. Belter. I have examined Government's Ex-
hibit 4, the Belter check, and recognize it as the
original $500 check. It was sent to us by the Fed-
eral Reserve branch of the Spokane Bank on Sep-
tember 21st, 1935, and we received it on September
23rd, 1935, and we returned it to the Federal Re-
serve Bank that same afternoon on account of un-
collected funds. We finally received the check on
September 28th, 1935, from the Bank of California,
at Portland. At that time we received the documents
I have in my hand, No. 9, accompamdng the check.
The check was received by us as a collection item.
The check w'as paid at that time, September 28th,
1935, the same day we received it. [98] Govern-
ment's Exhibit 9, the collection record, bears some;
notations in my own handwriting. Fifty cents is the
exchange, at the rate of ten cents a hundred. We
sent them a draft for $499.50, a draft on the Fii^t
National Bank of Portland. That is the correspond-
ent bank of the First National Bank of Kennewick.
We paid the Belter check the second time it came to
the bank. We paid it with a draft.

(A document w^as thereupon produced and
marked Government's Exhibit 11 for Identifi-
cation.)

Government's Exhibit 11 for identification, is a
draft on the First National Bank of Portland, Ore-
gon. It was written on September 28th, 1935 for

I United States of America IIT

(Testimony of J. L. Bliss.)

$499.50, payable to the Bank of California, at Port-
jland, Oregon. This is the draft which we sent in
^payment of the Belter check when it was finally
paid. I made out and signed the draft myself. After
making out the draft in payment of the Belter
check when it was finally paid. I made out and
isigned the draft myself. After making out the draft
|in pajTiient of the Belter check, I sent it by mail
to the Bank of California, at Portland, Oregon. I
[sent it direct, not through the Federal Reserve, and
jthen we stamped their collection slip ''paid" with
our bank stamp and took off the fifty cents charge.
I put the draft in an envelope, addressed it, and
Iput postage on it and then deposited it in the United
States Mail directed to Portland. The draft is
'dated September 28th, 1935. It went out on the
afternoon mail. The funds for payment of the Bel-
jter check were placed to Mr. Belter's account and
jcredit on the same day this check came in, Septem-
iber 28th, 1935. There was a real estate mortgage
jOn his property. The bank loaned him the $500.

(Cross Examination.)

By Mr. Biggs :

I personally put the draft in the mail. I enclosed
|the draft in an envelope, addressed it, stamped it
and dropped the envelope in the mailbox. When
the Belter check came to the bank and there was
money available to pay it, we cashed the check.

Q. That is, you charged his account and credited
your own account 0 the bank's account — with five
[hundred dollars; isn't that correct?

118 Joe Mazurosky v&.

(Testimony of J. L. Bliss.)

A. This five hundred dollar check — the original
five hundred dollars, was placed to Mr. Belter's ac-
count and then we charged this five hundred dollar
check up to his account.

Q. That means you deducted that five hundred
dollars from his account and you credited the bank's
account? [99]

A. Credited the bank's account with this draft.

Q. That is, your own bank's account?

A. Yes.

Q. In other words, you cashed the check, did
you not?

A. Yes. For cashing the check and making out
the other check, we charged a fee of fifty cents. We
then forwarded it to the other bank. It is cus-
tomary for banks to make a charge of that kind
at the rate of ten cents a hundred dollars. It is
an agreed rate. The rates vary with banks in other
districts.

ROBERT C. GEENTY

was thereupon produced as a witness in behalf of
the United States, and, having been first duly sworn,
was examined and testified as follows :

By Mr. Dillard:

I am a teller, with the U. S. National Bank of
Portland. I was so employed during the year 1934
in the collection department, I have examined
Goverimient 's Exhibit 3 for identification, the Allen

United States of America 1 1 9

(Testimony of Robert C. Geenty.)
' bank draft which you have handed me, and state
that I have seen that document before. I have with
' me some records of the bank concerning it. Naming
these records, they are a copy of collection receipt
in the name of Joe Mazurosky covering a five hun-
dred dollar draft drawn by the Mercantile Bank
of Boulder, Colorado, on the U. S. National Banli
of Denver, Colorado. It is signed by Joe Mazurosky
and signed by myself. The document refers to the
; Allen draft which you gave me; it bears the cor-
, responding number; 283427 is on the endorsement
I on the back of the draft and also on the receipt,
our collection record — out-going record. I call these
documents the record and the receipt. The receipt
'was what I described first. The draft was presented
ito us on September 25th, 1934, by Joe Mazurosky,
ilfor collection with instructions to send air mail,
{wire fate, rush, and it was sent out that day to the
'Federal Reserve Bank of Denver, Colorado, for pre-
isentation to the U. S. National Bank of Denver,
with the instructions to wire fate, and on Septem-
ber 27th we received a ^^4re stating the collection
,was paid.

(A document was thereupon produced and
marked Government's Exhibit 30 for identi-
fication.)

Exhibit 30 for identification is what we call a
iuplicate collection receipt. The words ''Joe Mazu-
j.*osky" in the left-hand corner, must have been

120 Joe Mazurosky vs.

(Testimony of Rol)eTt C. Geenty.)
placed there by Joe Mazurosky, because we don't i
take checks for collection unless the depositor is I
[100] properly identified. The check was presented !
to me and I signed the receipt. That is my writing.
I made it out. My writing on the receipt refreshes
my recollection with respect to the conversation I
had with Mr. Mazurosky. Mr. Mazurosky told mo
on presentation to collect the check for him, send
it air mail, wire payment or non-payment. Mr.
Mazurosky received the proceeds of the check. The
blue document attests that.

(The document was thereupon marked Gov-
ernment's Exhibit 31 for identification.)

The document marked Government's Exhibit 31
for identification, which you have handed me, is our
check. When w^e received the wire that the check
Avas paid, we issued a collection department check
paj'able to Joe Mazurosky, signed by an officer of
the bank, for $498.60, and it was endorsed by Joe
Mazurosky and O. K.'d by myself and cashed by our
payroll teller. It bears Payroll stamp No. 2. The
check was sent east for collection by air mail. I put
it in an envelope and addressed it and paid the
postage on it and put it in the United States mail.

Cross Examination

By Mr. Biggs:

I did not personally do that nor did I see any-
one do it. It is the usual procedure and that is

United States of America 121

(Testimony of Robert C. Geenty.)
what I base my conclusion on. The check was in
the amount of $500, and after it was collected, I
paid over the proceeds of $498.60. Part of the
charge was for wiring and part for collection. Our
collection charge was fifty cents. The charge varies
according to the amoiuit.

Redirect Examination

By Mr. Dillard:

It is the custom of the bank in sending items for
collection to use the air mail or the regular mail.

\ Stipulation of Counsel

By Mr. Strayer:

I That is correct, your Honor. It is stipulated that
Im original check dated December 6th, 1935 on the
Farmers & Merchants Bank of Rockford, Wash-
ngton and payable to J. C. Adams in the sum of
hree hundred dollars, signed E. C. Deibert, en-
iorsed J. C. Adams and Joe Mazurosky, of which
jovemment's Exhibit 5 is a photostatic copy [101]
hereof, was sent by the Federal Reserve Bank of
>an Francisco, Portland branch, from Portland in
Ihe State and District of Oregon on December 7th,
i935 to the Federal Reserve Bank of San Fran-
isco, Spokane Branch, at Spokane, Washington;
hat said check was on December 9th, 1935 sent by
le Spokane branch of the Federal Reserve Bank of

122 Joe Maeurosky vs.

San Francisco to the Portland branch of the Fed-
eral Reserve Bank of San Francisco in Portland in
the State and District of Oregon. It is fui-ther
stipulated that it was the custom of both the Spo-
kane and the Portland branches of the Federal Re-
serve Bank of San Francisco at the times that the
check was so sent to forward all such items by the
United States mail.

Mr. Biggs: We will waive the question of its
being a photostatic copy, Your Honor, and make no
point of the fact that the Government has not the
original check, and we will further stipulate in ac-
cordance with the matter just dictated into the
record; not to the fact of making, but the fact that
it was sent and that it was the custom to send by
mail, if the Court please, and the defendant per-
sonally consents to that fact.

The Defendant: Yes, that is right.

The Court: The record may so show, and a
written stipulation may be signed by the Govern-
ment counsel, counsel for the defendant, and by the
defendant.

Thereupon a further stipulation was read into the
record as follows:

It is stipulated and admitted by the defendant
in open court that the check referred to in Comit 1
of the indictment, being Government's Exhibit No.
1 signed Christine M. Mershon, w^as presented at
the Portland, Oregon branch of the Bank of Cah-
fornia, N. A., for deposit in the savings account
of the defendant by the defendant personally on or

United States of America 123

about the 3'Otli day of October, 1934, and that said
check was sent by a messenger in the ordinary
course of banking business from the Bank of Cali-
fornia to the Portland branch of the Federal Re-
serve Bank of San Francisco, being received by that
bank on the 30th day of October, 1934, according
to the custom and usage of banking practice and the
course of business of the respective banks, and on
the same day was forwarded by the Portland branch
of the Federal Reserve Bank of San Francisco at
I Portland in the State and District of Oregon to the
' Seattle branch of the Federal Reserve Bank of San
Francisco; that it was the custom and practice in
the ordinary course of business of the Portland
branch of the Federal Reserve Bank at said time to
[102] enclose checks so received for collection in a
, postpaid envelope addressed to the member bank
jto which the same was to be sent and to place the
isame in the United States postoffice at Portland,
[Oregon to be sent and delivered by the postoffice
lestablishment of the United States according to the
laddress and direction thereon.

Mr. Stray er: May I interrupt? The testimony
refers to certain exhibits which have been identified
md not received in evidence. I think before we con-
inue with the stipulation we should now offer in
;^vidence the exhibits which have been identified.
• Mr. Biggs: If the Court please, we will make a
,^eneral objection to the introduction of any of these
Exhibits on the ground and for the reason that they
'elate to transactions and are in connection with

124 Joe Mazurosky vs.

transactions about which the defendant had no
knowledge and which the record shows he had no
knowledge of; that in connection therewith state-
ments have been made by others in the absence and
not in the presence of the defendant Mazurosky ; on
the further ground that there is no evidence that to
the defendant's knowledge these checks were taken
in furtherance of any unlawful enterprise, there
being no e^ddence that there was any conspiracy or
agreement on the part of the defendant that checks
or any checks might be taken pursuant to such a
scheme to defraud. Now with respect to the checks,
and I haven't the exhibit numbers right at hand —
with respect to the Allen check particularly, Your
Honor, and any checks which have not been set
forth in the indictment, and the Wagner check

Mr. Strayer: The Wagner check is in evidence.

Mr. Biggs: Oh, is it in evidence? The further
objection is made that they relate to transactions
upon which no crime is charged by the Government
and which are not contained in the indictment or
described in the indictment. I think that objection,
Your Honor, covers it. There may be other grounds,
but I think that covers it.

The Court: The objection is overruled. The ques-
tion whether there is a conspiracy or unlawful
agi^eement by the defendant with other persons in
this case is a question for the jury, upon which they
will arrive at a conclusion on consideration of the
evidence. The question of whether these trans-
actions which did take place out of the hearing of
the defendant, without his personal participation

United States of America 125

at the time, were to his knowledge and whether he
was a participant or not is a jury question also,
to be solved by the jury under the instructions.
The objections are overruled. As to the Allen check
— which transaction was that? [103]

Mr. Biggs : The Allen check is the Colorado case ;
it relates to Government's Exhibit

Mr. Strayer: Three.

The Court: The Court admits the document on
the gromid that it may tend to show a similar trans-
action and may tend to show a participation by the
defendant in some transaction in which the other
persons were engaged who were engaged in that
particular one, and may therefore throw light on
the connection of the defendant with these particu-
lar persons involved in the transaction relation to
the Allen check. That transaction and the check are
admitted in evidence for the purpose of showing
either knowledge or intent or participation in other
transactions named in the indictment.

Mr. Biggs: May I have an exception, Your
Honor ?

The Court : Exception is allowed.

Mr. Strayer: I understand it is your Honor's
ruling that all exhibts marked for identification are
admitted ?

The Court : Unless there are others to which my
attention hasn't been called specifically.

(The documents heretofore marked Gov-
ernment's Exhibits 1, 3, 8, 9, 11, 15, 27, 28, 29,
30 and 31, respectively, for identification, were
I thereupon received in evidence.)

126 Joe Mazurosky vs.

The Court : You may proceed, Mr. Holmes.

(The balance of the stipulation was thereup-
on read by the reporter as follows:)

It is stipulated and admitted by the defendant in
open court that the check referred to in Count 2
of the indictment, being Government's Exhibit No.
4, signed H. F. Belter, was presented at the Port-
land, Oregon branch of the Bank of California, N.
A., for deposit in the savings account of the de-
fondant by the defendant personally on or about the
20th day of September, 1935, and that said check
was sent by messenger in the ordinary course of
banking business from the Bank of California to
the Portland branch of the Federal Reserve Bank
of San Francisco, being received by that bank on the
20th day of September, 1935 according to the cus-
tom and usage of banking practice and the course
of business of the respective banks, and on the same
day w^as forwarded by the Portland branch of the
Federal Reserve Bank of San Francisco at Port-
land in the state and district of Oregon to the Spo-
kane branch of the Federal Reserve Bank of San
Francisco; [104] that it was the custom and prac-
tice in the ordinary course of business of the Port-
land branch of the Federal Reserve Bank at said
time to enclose checks so received for collection in a
postpaid envelope addressed to the member bank to
which the same was to be sent and to place the same
in the United States postoffice at Portland, Oregon
to be sent and delivered by the postoffice establish-
ment of the United States according to the address

United States of America 127

and direction thereon, and said check was received
by the Spokane branch of the Federal Reserve Bank
of San Francisco on the 21st day of September,
1935.

It is stii3iilated and admitted by the defendant in
open court that the check referred to in Coimt 3
of the indictment, being Government's Exhibit No.
4 signed H. F. Belter was presented at the Port-
land, Oregon branch of the Bank of California, N.
A., to the collection department of said bank, for
i collection by the defendant personally on the 27th
I day of September, 1935 and on that day was for-
I warded from Portland, Oregon by said bank for col-
: lection to the bank upon which it was drawm, namely,
ithe First National Bank of Kennewick, Washing-
ton, at Kennewick, Washington ; that it was the cus-
tom and practice and ordinary course of business of
the Bank of California at that time to transmit such
items for collection by enclosing the same in an en-
velope addressed to the addressee with postage pre-
Ipaid and placing the same in the United States post-
office at Portland, Oregon, to be sent and delivered
by the postoffice establishment of the United States
according to the address and direction thereon, and
said check, together with Government's Exhibit 9,
Was received at Kennewick, Washington by the ad-
dressed, the First National Bank of Kennewick,
Washington, on the 28th day of September, 1935;
hat it was the established banking practice, custom,
md the usage of the said First National Bank of

128 Joe Ma^urosJcy vs.

Kennewdck, Washington to receive such collection
items through the United States mails.

It is stipulated and admitted by the defendant in
open Court that the draft referred to in Count 4
of the indictment, being Government's Exhibit No.
11, signed Jay D. Bliss, was on or about the 28th day
of September, 1935 forwarded by said First National
Bank of Kennewick, Washington, to the Bank of
California, N. A. at Portland, Oregon; that it was
the custom and practice and ordinary course of
business of the First National Bank of Kennewick,
Washington at that time to transmit such items
by enclosing the same in an envelope addressed to
the payee with postage prepaid and placing the same
in the United [105] States postoffice at Kennewick,
Washington be sent and delivered to the addressee
thereof by the postoffice establishment of the United
States according to the address and direction
thereon; that the said Exhibit 11 was received by
the Bank of California, N. A. at Portland, Oregon
on or about September 29th, 1935.

Mr. Strayer: If the Court please, may we have
the defendant now state in open court that he agrees
to the terms of the stipulation?

The Defendant: Yes, Your Honor.

Mr. Biggs: And counsel will so stipulate.

Mr. Strayer: Both counsel?
• Mr. Biggs: Both counsel.

United States of America 129

FRANK L. KELLER

was thereupon produced as a witness in behalf of the
United States, and, having been first duly sworn,
was examined and testified as follows:

By Mr. Stray er:

My name is Frank L. Keller, and I reside at
Portland, Oregon. I am chief clerk at the Western
Union office in Portland and have served as such
for twenty years. I have in my custody a record of
telegi'ams sent from the Portland office of the West-
ern Union. I have a record of two money trans-
mittals by Joe Mazurosky in the year 1935 and one
in 1936.

(A copy of telegram was thereupon marked
Govermnent's Exhibit 32 for identification.)

I have in my possession a document other than
the one marked Exhibit 11 for identification, which
has reference to that Exhibit.

(The document w^as thereupon marked Gov-
ernment's Exhibit 33 for identification.)

Government's Exhibit No. 33 is an official record
of my office. I know the defendant, Joe Mazurosky,
but do not know his signature. I have no personal
, knowledge of Exhibits 32 and 33 for identification;
;only as they were in the records, that is all. About
ifour months ago I had a discussion wdth Mr. Mazu-
rosky in our office about the documents. He asked
me to secure for him information on money orders
that he had sent over certain periods of time in '34
and '35. He only wanted information as to who they
jwere going to and the amounts and the dates. We

130 Joe Maeurosky vs.

(Testimony of Frank L. Keller.)
endeavored to locate them between the dates that he
gave us and did locate such records. I am referring
to Exliibits 32 and 33 for Identification. [106]

(The documents heretofore marked Govern-
ment's Exhibits 32 and 33, respectively, for
identification, were thereupon received in evi-
dence without objection.)

We had no further talk with Mr. Mazurosky after
we located the records, but we talked ^sdth him twice
concerning the locating of the records. About a
month after the first conversation which I men-
tioned, I had another talk with Mr. Mazurosky at
our office. "We hadn't found enough to satisfy him
and he gave us some additional dates in which to
search, and we covered a wider spread of time. We
were to look under two names, Mazurosky and
Morris, which were to be names of the sender. He
said he might possibly have shown the name of the
sender as "Morris", and for us to watch for that
name. He didn 't know the name of the receiver, and
that was the information he w^anted us to secure for
him. I don't recall whether he said there was more
than one receiver. I made no memorandum of the
conversation ; I just took the dates and names.

Cross Examination
By Mr. Biggs:

Referring to Exhibit 32, the words ** agony dream"
refer to the amount of money that was to be paid.
They are a part of our money code. We only
searched our records for money orders. One of the

United States of America 131

(Testimony of Frank L. Keller.)
Exhibits we had in our Portland files; the other
one had to be returned from San Francisco from
the auditor, but they all went through the Portland
office. They both relate to the same transaction.

Redirect Examination
By Mr. Strayer:

I am not familiar with the codes and cannot say
what amount of money is meant by the words
"agony dream." It is showTi here to represent
$387.50.

A. C. THORSEN

was thereupon produced as a witness in behalf of
the United States, and, having been first duly sworn,
was examined and testified as follows:

By Mr. Strayer:

My name is A. C. Thorsen. I reside at Portland,
Oregon and am City superintendent of Postal Tele-
graph, which position I have held for over five years.
I have a record of a money transmittal through the
Postal Telegraph by the defendant, Joe Mazurosky.
(The document was thereupon marked Gov-
ernment's Exhibit 34 for identification.) [107]

The Exhibit 34 for identification is an official
copy of the telegraphed money order as sent on
October 20, 1934, by Joe Mazurosky.

(The document heretofore marked Govern-
ment's Exhibit 34 for identification was there-
upon received in evidence without objection.)

132 Joe Mazurosky vs.

(Testimony of A. C. Thorsen.)

Referring to the Exhibit, the words *' destiny dale
ages submit seal" represent $195.92. The first word,
'^ relax" is what we call a guard word of which we
have one for each city, and it is used to check cer-
tain money transfers so there will be no fraud be-
tween different offices and they rim in numerical
order. Each office has a number. It is just a code
word for a number.

C. B. WELTER

was thereupon recalled as a witness in behalf of the
United States, and, having been heretofore duly
sworn, was examined and testified further as fol-
lows:

By Mr. Dillard:

On the 25th day of August, 1936, and on the 21st
day of April, 1937, I talked wdth Joe Mazurosky
concerning certain checks sent through the United
States mail. In the second conversation, Mr. Mazu-
rosky stated: ''T^Hien you talked with me last sum-
mer in regard to the Elvin check, and told me to go
home and sleep on it and come back to your office
the next day, you know I didn't sleep any that night,
or for several nights afterwards", and he volun-
teered the information that the checks were prob-
ably obtained in some illegal w^ay, but he didn't
know for certain and he couldn't see what haim
there would be in the event that he cashed the checks-

United States of America 133

(Testimony of C. B. Welter.)

Then in response to my statement to him that there
must have been at least a dozen of those checks, he
said: ^'I giiess there was that many." Then I said,
''Joe, you know jow got ten and fifteen per cent
commission on those checks," and he made no reply.

Cross Examination
By Mr. Biggs :

I investigated this case for the United States
Government. Mr. Martin is at this time in the
Federal Penitentiary at Atlanta, Georgia. I told
Joe at the conversation mentioned above, that he
was getting ten or fifteen per cent commission on the
checks, and he made no answer. I recall testifying
in the case before, and I there testified to the same
effect, but it is not in the record of that proceeding.
The facts are as I stated them above, and I so tes-
tified at the former trial. If the record of the for-
mer trial does not state the conversations as I tes-
tified above, then the reporter [108] at the previous
trial made a mistake.

Redirect Examination
By Mr. Dillard:

Whatever the record of the previous trial shows,
I am now testifying to the facts as they occurred at
the time.

By Mr. Dillard:

We rest our case, Your Honor.

(The following exhibits were offered and received
in evidence.) [109]

134 Joe Mazurosky vs.

GOVERNMENT'S EXHIBIT 1.

'' Oct 29 1934 No _

Arlington State Bank

Write name of your bank (city and state) on

this line

Pay to the Order of _ _ $450.00

Four Hundred fifty & no/100 Dollars

For value received I claim that the above amount
is on deposit in said bank in my name subject to
this check and is hereby assigned to payee or holder
hereof.

CHRISTIAN M. MERSHOM
Address „ "

(Endorsed on back) H. J. Pierce

O. C. Stone
Joe Mazurosky

Pay to the order of any Bank or Banker or

through the Seattle Clearing House Assn.

All prior endorsements guaranteed

Oct 31 1934

19-1 Seattle Branch 19-1

Federal Reserve Bank of San Francisco

Pay to the order of any Bank or Banker or

through the Portland Clearing House Assn.

All prior endorsements guaranteed

Oct 30, 1934

24-1 Portland Branch 24-1

Federal Reserve Bank of San Francisco

United States of America 135

Pay to the order of any Bank or Banker or

Trust Co.

All prior endorsements guaranteed

24-6 Oct 30 1934 24-6

The Bank of California, N. A.

Portland, Oregon

GOVERNMENT'S EXHIBIT 3

"The Mercantile Bank & Trust Co. No. 53927

82-22

Boulder, Colo. Sept. 12 '34

Pay to the Order of Clara E. Allen $500.00

Five Hundred Dollars Dollars

To United States National Bank
23-14 Denver, Colorado

W. E. GRAZZU,

Cashier.

(Endorsed on back) Pay to the order of

Dr. H. J. Miles
Miss Clara E. Allen
Dr. H. J. Miles
Joe Mazurosky [110]

Pay to the Order of Any Bank or Banker
The United States National Bank

Portland, Oregon

All prior endorsements guaranteed

Coll. No. 283427

27 Sept 1934

Paid

Denver Branch Federal Reserve Bank. All prior

i endorsements guaranteed.

136 Joe Maeurosky vs.,

GOVERNMENT'S EXHIBIT 4

*'The First National Bank 98-147

Kennewick, Wash., Sept. 20, 1935

Pay to the Order of J. C. Adams $500.00
Five Hundred and no/100 Dollars

H. F. BELTER

No. 345 (Safe Deposit)
(Boxes for)
(Rent)

(Endorsed on back) J. C. Adams Joe Mazurosky

Pay to the order of Any Bank, Banker or Trust
Co. All prior endorsements guaranteed.
24-6 Sept 20 1935 24-6

Bank of California, N. A.
Portland, Oregon.

Pay to the order of any Bank or Banker or
through the Spokane Clearing House. All prior
endorsements guaranteed. Sept. 21, 1935
28-1 Spokane Branch 28-1

Federal Reserve Bank of San Francisco

Pay to the order of any bank or banker or thru
the Portland Clearing House. All prior endorse-
ments guaranteed. Sept. 20, 1935
24-1 Portland Branch 24-1

Federal Reserve Bank of San Francisco

Pay any Bank or Banker. All previous endorse-
ments guaranteed.

24-6 Sept 27 1935 24-6

The Bank of California, N. A.

Portland, Oregon

United States of America 137

GOVERNMENT'S EXHIBIT 5

''District No. 12 Member Federal Reserve Sys-
tem.

Farmers & Merchants Bank 98-186

Rockford, Wash. Dec 6 1935 No

Payment stopped.

Pay to the order of J. C. Adams $300.00
Three Hundred and no/100 Dollars

E. C. DEILIERA

N. P. 24-8"

(Endorsed on the back J. C. Adams Joe Mazurosky

Pay to the order of any Bank or Banker or
through the Portland Clearing House. All prior
endorsements guaranteed. Dec. 7 1935

24-1 Portland Branch 24-1

Federal Reserve Bank of San Francisco

Pay to the order of any Bank or Banker or
Through the Spokane Clearing House. All prior
endorsements guaranteed. Dec 9 1935

28-1 Spokane Branch 28-1

Federal Reserve Bank of San Francisco [111]

138 Joe Ma^urosky vs.

GOVERNMENT'S EXHIBIT 7

"98-37
Vancouver, Wash. Nov. 14 1925
Washington Exchange Bank Payment stopped.

Pay to the Order of O. A. Plummer $500.00
Five Hundred 00/100 Dollars
Exactly Five Hundred Dollars Exactly Exactly

HENRY WAGNER
Good for $500.00 When properly endorsed 12

Lloyd DuBois
P. M. Nov 18 1925

(Endorsed on back) O. A. Plummer Heniy Wag-
ner O. A. Plummer Joe Mazurosky
Cancelled.

O. A. Plummer
C-15297
786 Kearney St.
Be 5581

GOVERNMENT'S EXHIBIT 8

Savings Deposit
Savings Account No. 21630 Balance $2594.84

Deposited with

The Bank of California

National Association
Subject to conditions below
By Joe Mazurosky

Portland, Ore., Oct 30 '34

City items credited subject to actual payment.
Checks on this bank will be credited conditionally
and if not found good at the close of business the

United States of America 139

day of deposit, they will be charged back to de-
positor and the latter notified. Checks on other
banks in this city will be carried over for presenta-
tion the following' day. In receiving out of town
items for deposit or collection this bank acts in all
cases as the agent of the depositor and it and its
collecting agents may accept cash or bank draft
in payment of such items and shall not be answer-
able for items lost in transit or for any act or de-
fault of any bank who may receive such items for
collection either directly or indirectly, and shall
only be held liable when the item has been paid by
the drawee, and proceeds in actual funds or solvent
credits shall have come into its possession. Under
these conditions items for which actual funds or
solvent credits have not been received by this bank
may be charged back to the depositor's account.

Dollars Cts

1. Federal Reserve Bank

2. Canadian Bk. of Com. Currency
4. First National Bank Silver
6. The Bank of California, N. A.

11. U. S. National Bank.

Checks as follow^s 450 00

Savings Teller No. 2,
Oct 30 1934 24-6 Oct 30 '34 LW 2,144.84

[112]

140 Joe Mazurosky vs.

GOVERNMENT'S EXHIBIT 9

Return to The Bank of California, 24-6
National Association
Portland, Oregon.

Report By our No. 68646

Date 9/27/35

Receipt of the following is acknowledged.
By First Natl Bank Kennewick Wn
Payer Yourselves By H F Belter

Joe Mazurosky 202 N W 6th Ave
Or. Sav.

Protest No Date 9/20 Due Dmd

Amount 500.00

.50 Ex

499.50

Comments and special instructions

Please Hold for a few days if necessary
Remit in Portland Exchange

Signature J

First National Bank Sept 28, 1935 Paid

Kennewick, Wash.

United States of America 141

Credit Country Collection Department

The Bank of California, 24-6

National Association

Portland, Oregon

Date 9/27/35 No. 68646

First Natl Bank Kennewick Wn
Credit to Joe Mazurosky 202 N W 6th Ave

21630
Cr. Sav.

Payer Yourselves by H F Belter

Protest No Date 9/20 Due Dmd
Amount 500.00
Cost us .50

499.50

Documents and special instructions
Please hold for a few days if necessary
Remit in Portland Exchange

Sept 30 '35 2,245.62

Paid and credited to your account
Sept. 30 1935

The Bank of California, N. A.
Portland, Oregon.

142 Joe Mazuroshy vs.

Department Record File Under No. 68646

The Bank of California, 24-6

National Association

Portland, Oregon

Date 9/27/35
We enclose for collection

Collecting Bank First Natl Bank

Kennewick Wn

Depositor Joe Mazurosky 202 N W 6tli Ave
Cr. Sav.

Payer Yourselves by H F Belter

Protest No. Date 9/20 Due Dmd
Amount 500.00
Cost us .50

499.50

Documents and special instructions
Please hold for a few days if necessary
Remit in Portland Exchange

"^to'

Paid and Credited to your Account Sept 30, 1935
The Bank of California, NA
Portland, Oregon

[113]

United States of America 143

GOVERNMENT EXHIBIT 11

98-147 12

The First National Bank
Kennewick, Wash., Sept 28 1935 193 No. 40246

Pay to the Order of The Bank of California, N. A.,
Portland, Oregon $499.50

First Nat'l. Kennewick $499 and 50 cts
To The First National Bank
24-4 Portland, Oregon.

JAY D. BLISS

C Cashier

(Endorsed on back) Received payment thni Clear-
ing House 24-6 Sept 30 1935 Portland
Oregon The Bank of California, N. A.

Collection Sept 30 1935 Department

GOVERNMENT EXHIBIT 15

9/23/34

Reed from Miss Clara E. Allen Five Hundred
eighty seven ($587.50) in full payment of acct.
due Dr. H. J. Miles Reed, by J. J. Carson
710 Republic Bldg Denver

144 Joe Ma^nrosky vs.

GOVERNMENT EXHIBIT 26

Farmers & Merchants Bank 97-186

District No. 12 Member Federal Reserve System

Rockford, Wash. Dec 6 1935 No

Payment stopped

Pay to the Order of J. C. Adams $300.00

Three Hundred and no/100 Dollars

E. C. DEIBERT

N. P. 24-8

(Endorsed on the back) J. C. Adams Joe Mazu-
rosky

Pay to the order of any bank or banker or
through the Portland Clearing House All prior
endorsements guaranteed Dec 7 1935

24-1 Portland Branch 24-1

Federal Reserve Bank of San Francisco

Pay to the order of any bank or banker or
through the Spokane Clearing House All prior
endorsements guaranteed Dec. 9 1935

28-1 Spokane Branch 28-1

Federal Reserve Bank of San Francisco

[114]

United States of America 145

GOVERNMENT EXHIBIT 27

Savings Deposit
Savings Account No. 21630 Balance $2745.62
Deposited with The Bank of California National
Association Subject to the conditions belov^.

By Joe Mazurosky Portland, Ore. Sept 20 '35

(Conditions, beginning with words "City items
credited" and ending with words ''Back to the de-
positor's account" exactly the same as on Exhibit
8.)

Dollars Cts

1. Federal Reserve Bank

2. Canadian Bk. of Com.

4. First National Bank Currency
6. The Bk. of California, N. A. Silver
11. U. S. National Bank Checks as follows

98-147 500 00
A

92
Sept 20 '35 2,245.62

GOVERNMENT EXHIBIT 28

Savings Deposit
Savings Accomit No. 21630 Balance 2500.12

Deposited with The Bank of California National
Association Subject to the Conditions below

By Joe Mazurosky

Portland, Ore. Dec. 6 '35

(Conditions, beginning with words "City items
credited" and ending with words "Back to the de-

146 Joe Mazuroshy vs.

positor's account" exactly the same as on Exhibits
8 and 27)

1. Federal Reserve Bank

2. Canadian Bk. of Com.

4. First National Bank Currency Dollars Cts.
6. The Bk. of California, N. A. Silver
11. U. S. National Bank

Checks as follows

98-186 300 00

92
A
6 '35 2,200.12

GOVERNMENT EXHIBIT 29

Entered By A

Savings Department Withdrawal

New Balance $2,245.62

Portland, Oregon Sept 20 1935

Received from The Bank of California, Portland,
Oregon Five Hundred Dollars, $500.00
Sept 26 '35 92

Account No. 21630 Joe Mazurosky

No payments will be made wdthout the pass book

[115]

United States of America 147

GOVERNMENT EXHIBIT 30.
315

Subject to conditions printed on back hereof, this
receipt must be returned to bank.
Not transferable.

The United States National Bank

Portland, Oregon

$500.00 Duplicate 9/25/34:

Received for collection for account of Joe
Mazurosky.
Address: 202 N. W. 6th

Item Draft U. S. Natl Denver Colo.

283427

Instructions Air Mail Wire fate Rush

The United States National Bank
Per Gunty

Teller

The undersigned hereby agrees to the terms and
conditions of this receipt.

Joe Mazurosky,

Signature of Owner

(on back) Important Notice

In receiving items for deposit, credit, or collec-
tion, the bank acts only as depositor's collecting
agent, and assumes no liability for the insolvency
or negligence of its direct or indirect collecting
agents, nor for losses in transit, and each such agent
selected shall only be liable for its own negligence.

148 Joe Mazurosky vs.

All items are credited conditionally, at time of de-
posit, and for the convenience of the depositor, and
may be sent directly or indirectly to the bank upon
which they are drawn, and the bank may accept i
from any drawee bank, or collecting agent, an ex-
change draft or credit therefor, as conditional pay-
ment in lieu of cash, and the bank will only be lia- 1
ble when the proceeds in actual funds, or solvent !
credits, come into its possession. The bank may
charge back any item at any time before ultimate
payment, whether returned or not; also any items
drawn on the bank not good at the close of business
on the day deposited." Past due payments shall be '
^accepted unless instructed in writing to the contrary.
It is the Bank's present intention to send the debtor j
periodical payment notices, but it shall not be liable
for failure, inadvertent or otherwise, to send any
such notice or notices.

Letter to D/A Boulder Colo 11/3/35

GOVERNMENT EXHIBIT 31.

Collection No. 21018

Department. Portland, Ore. Sept. 27 1934

24-11 United States National Bank
Pay to the order of
Joe Mazurosky $498.60

Four Hundred ninety eight and 60/100 Dollars

T. F. DUNN,

A Cashier.

United States of America 149

Countersigned :

Edwin Hallwyler
Teller

Not negotiable
This Check for use only between departments
within this bank. [116]

(endorsed on back) Joe Mazurosky

O K Genty.

GOVERNMENT EXHIBIT 32.

The Western Union Telegraph Company

Incorporated

Money Order Message

1936 Jul 7 A M 10 54

Number 4 AB Check 13 Office from : Portland, Org.

July 7 1936 1049a
MOD (stamp indistinguishable)

Butte Mont
: Agony Dream fifty cents to B E Terrell will caU.
; WU Joe Mazurosky

(sig.) MOD
I Time 1053 A

; Not to be transmitted
202 NW 6th Be 5766 smr tqr

150 Joe Mazurosky vs.

GOVERNMENT EXHIBIT 33 387.
Western Union Money Order Amount 387J
No. 407 Money order charge 1.60

Time filed 7604 Telegram tolls .97

Received by #258 .05

Sent by 07 Total 390.12

Subject to the conditions below and on back
hereof, which are hereby agreed to.

July 7 1936
PR Portland Oreg. Jul 7 1936 AB

Pay to R. E. Terrell
W.C.

Street address Western Union
Place Butte, Mont

Amomit Three Hundred eighty seven and 50/100

Dollars and cents ($387.50)

(A message, to be delivered with the money, costs
but a little more and saves a separate telegram. It
may be written on the following lines)

Message to be delivered with the money: _

Signature JOE MAZUROSKY

Sender's Address for reference 202 N. W. 6th Ave.
Sender's Telephone Number Be 5766

Positive evidence of personal identity is not to be
required from the Payee, and I authorize and direct
the Telegraph Company to pay the sum named in
this order at my risk to such person as its agent be-
lieves to be the above named Payee unless the fol-
lowmg is signed :

United States of America 151

Positive personal identification required. I desire
that the above named payee shall be required to
produce positive evidence of personal identity be-
fore payment is made.

Signature

GOVERNMENT EXHIBIT 34

Money Order Message
Postal Telegraph — Cable Company
No. 12 Check 16 Transfer

\ (office) Portland, Oregon, Oct. 20, 1934.

1 To Transfer Agent

I at Seattle, Washn. E 117 217 EA

, (guardword) Relax (Name of payee) R. E. Terrell
(address of payee) care Postal Telegraph Seattle
I (Code word for amount) Desting DaleAges Submit

Seal
(from — name of sender) Joe Mazurosky 195.92

I .43

100.00 1.10

90 197.45

5.90 OT

2

No. 54. 195.92 (202 N. W. 6 Ave.) [117]

152 Joe Mazurosky vs.

By Mr. Biggs:

Now, if it please the Court, the defendant at this
time moves the Court for its Order directing a
verdict of not guilty as to each of the counts of the
indictment. Does the Court want me to proceed?

The Court: I think you had better rest your case
first.

Mr. Biggs: Very well. That is preliminary to
the motion. The Government having rested and the
defendant at this time resting, moves the Court for
its order directing a verdict of not guilty as to each
of the counts in the indictment, on the ground and
for the reason that there is no substantial evidence
sufficient to submit to the jury which establishes or
tends to establish the connection of the defendant
with any scheme or artifice to defraud, or the par-
ticular scheme or artifice to defraud described and
set forth in each coimt of the indictment, or the use
of the mails pursuant to said scheme, there being
no conscious participation of the defendant in such
scheme. With respect to the count of the indictment
relating to the defendant's alleged connection with
Roy Martin, John Gray, and others, for the further
reason that there is no testimony whatsoever con-
necting the defendant with any criminal de^dee,
scheme, intent, or plan on their part, all of the tes-
timony admitted being the testimony of acts or
declarations of alleged co-conspirators, and there
is an inadequate prima facie showing of a con-
spiracy.

The Court: Which count is that, now?

United States of America 153

Mr. Biggs: That is Count 1 of the indictment,
Your Honor, and also Count 7 of the indictment,
1 being the conspiracy count, and for the further
■ gromid that there is no substantial evidence that the
I United States mails were used by the defendant
volimtarily or involuntarily or at all in connection
; 'with this.

j Thereupon the following proceedings were had:
! The Court : The Court at this time denies the mo-
ition for a direct verdict as to Counts 4, 7 and 8 of
the indictment, and grants the motion as to Counts
1, 2, 3, 5 and 6.

I Mr. Biggs: Does the Court desire a verdict to
I be prepared on those counts'?

I The Court : No, it can be included in the general
I verdict.

i Mr. Biggs: And may we have an exception to
the Court's ruling as to Counts 4, 7 and 8 of the
j indictment 1

The Court: Yes. [118]

(Thereupon the matter was argued to the
jury by counsel for the respective parties, and
at the close of argiunent the Court instructed
the Jury as follows:)

The Court: Gentlemen of the Jury, you have
now heard all of the evidence and the arguments of
counsel in the case of the United States of America
against Joe Mazurosky, defendant, and it is now
my privilege and duty. Gentlemen, to outline for
'you the principles of law upon which these matters

154 Joe Ma^urosky vs.

are to be determined and the guilt or the innocence
of the defendant as to certain charges of this indict-
ment decided.

I appreciate very much the temper of this jury as
to the fact that the Court has found it necessary to
confine you during the course of this trial and keep
3^ou away from your ordinary occupations and pur-
suits. The Court felt it was necessary to do that
in the discharge of its duty. I am much pleased,
Gentlemen, to note that you have accepted it in
good part and with full consideration of the fact
that it was as unpleasant for the Court to do it as
it was for you to remain confined.

I have noted also with a great deal of pleasure the
fact that you have followed this voluminous evidence
and the ramifications of these transactions with
great interest, and it is mth entire satisfaction that
I now^ submit the issues of fact to you for deter-
mination.

There are many things which enter into the trial
of a criminal case which are not in themselves evi-
dence, and it is upon the evidence alone, subject to
the rules of law, that you are to make a determina-
tion.

In the first place, there is the indictment in the
case. The indictment is a formal charge of crime
returned by the grand jury of the United States
in order to advise the defendant of what charges
are made against him, but the grand jury has no
function to determine the truth of the charges; it
simply sets out the charges in the indictment, and

United States of America 155

then the plea of not guilty puts in issue these
charges, and the truth of the matter is for you to
try, therefore, although you find positive statements
in the charges of the indictment you cannot accept
them as true until they have been proven beyond a
reasonable doubt and there is no inference to be
drawn from the fact that an indictment has been
I'etumed or that its language is positive that the
defendant is guilty of the crimes charged therein.

The function of the judge and the function of
the jury in the trial of a case [119] are entirely dif-
ferent and distinct. It is your sole and exclusive
duty to pass upon the questions of fact. It is the
duty of the Court to rule upon matters of law and
to instruct you as to the rules of law^ that are to be
applied in determining the issues of fact. A Federal
judge further has the power of smnming up the evi-
dence and of indicating to you the connection of
the evidence with the charges in the case and the
credibility that may be extended to the witnesses.
If I do sum up the evidence in this case, Gentlemen,
or if I indicate to you in any manner wdiat my
opinion as to guilt or innocence is or the credibility
of any witness in this case, I want you to remember
that you are the sole and exclusive judges of the
facts in the case and that although you may know
my ppinion you are not bound by it in any degree
whatsoever.

The rules of law which I lay down for you are
final and binding. There are means whereby if I
make a mistake as to the rules of law, that error

156 Joe Mazurosky vs.

can be corrected by a higher court, but as between
the jury and the judge the rules of law as laid down
are final and binding and you must follow them.

Counsel have made arguments in this case and |
there have been various arguments as to admis-
sion of testimony. Whatever counsel sa}^ whether
it is in argument to the Court or in argument to
you, it is not testimony or evidence. Counsel are
officers of the court, they are under a duty to fairly
try the case, and this case on both sides has been
fairly and ably tried, but the arguments they make
to you and statements made in argument are not
evidence and insofar as the}^ suggest to you what the
rules of laAv are, those are not binding upon you
either.

It is your function and duty to weigli tlie evi-
dence and take your own memory of what tlie evi-
dence was and apply that according to the rules
of law laid down to you by the Court. The counsel >
are not witnesses and you are not bound to follow i
any inference or deduction to be drawn from the
testimony which you remember.

Now the defendant in this case has been indicted
by the grand jury upon eight counts. The first six
of those counts relate to what are called substantive
crimes, using the mails to defraud. The last two
counts relate to alleged criminal conspiracies. To
each of these counts the defendant has pleaded not
guilty, and that plea of not guilty as to each count
puts in issue all of* the material allegations of the

United States of America 157

count. Each count charges a separate crime and
must be considered separately [120].

In a criminal trial all of the presumptions are in
favor of innocence, and in this case as to each count
of this indictment the defendant is presumed to be
innocent unless and until proven guilty to your
satisfaction on the particular coimt beyond a rea-
sonable doubt. This presumption follows the de-
fendant throughout the trial and up to such point,
if ever, as I said before, that it is overcome by
evidence to your satisfaction and beyond a rea-
sonable doubt.

The Government is so bound to prove each ma-
terial allegation of the indictment, and as these
counts relate to separate crimes, before conviction
can be obtained must so prove each material allega-
tion of each comit before a verdict of guilty could
be brought in as to that coimt.

As to all the counts of the indictment, these ma-
|terial allegations are, first that there has been a
1 crime committed as charged in the particular count ;
second, that the defendant is the person or one of
the persons who committed the crime; and third,
that the crime, if any, v^^as committed in the State
land District of Oregon. As to that particular fea-
Iture I charge you under the rules of law that there
is sufficient connection charged between the crime,
iif any, and the State and District of Oregon, so you
!need to pay no further attention to that.
' As to the substantive offenses charged in Counts
|1 to 6, the Government must prove that there was a

158 Joe Mazurosky vs. j

scheme or artifice to defraud and known to the de-
fendant and that the defendant at the time he re-

I

ceived the particular check mentioned in the in- j
dictment, intended to participate therein and in- 1
tended specifically to make use of the United States
mails in regard thereto, and further, that the j
United States mails were made use of in pursuance
of the fraudulent scheme.

As to the conspiracy comits, the Goverimiient must
prove that the defendant conspired or confederated
or agreed as charged in the particular count of the
indictment to violate the section of the statutes of
the United States set out in the indictment, that
being the section of the statute relating to using the
United States mails to defraud.

It is not necessary that the govermnent prove
that the crime was committed on the exact date
named in the indictment. It is sufficient if it would
be proven that the crime was committed at any date
within three years prior to the date of the finding
of the indictment, and as far as a conspiracy is con-
cerned, that the conspiracy [121] existed withm
some time within three years prior to the date of the
finding of the indictment and even though formed
before, it was still in existence duiing that time,
and that during that time the defendant participated
in it, if you find he did at all.

I have used the term "reasonable doubt", which
I shall now define. The term "reasonable doubt"
means such a doubt as may occur in the mind of an
ordinary, reasonable, prudent man after a full, fair,

United States of America 1 59

and complete examination of all the facts and cir-
cumstances of the case. It must not be a captious
or mere possible doubt inconsistent with the evi-
dence which the jury credits and believes, but such
a doubt as in the graver and more important affairs
of life would cause the ordinary, reasonable, and
prudent man to pause and hesitate before acting
upon the truth of the matter charged. Absolute
demonstration is not required, that is, proof to a
mathematical certainty, because such proof is rarely
attainable. Moral certainty alone is required, or
that degree of proof which produces conviction in an
unprejudiced mind.

It is made a violation of the statutes of the United
States for one or more persons to conspire, confed-
erate, or agree together to commit any offense
against the United States where one of said persons,
i pursuant to the unlawful agreement, conspiracy, or
I confederation, does an overt act, that is, an act rea-
, sonably intended to assist in carrying out the un-
I lawful agreement and intent.

The statutes of the United States also provide —
and this section of the statute is involved in the con-
spiracy counts:

' ''Whoever, having devised or intending to devise
iany scheme or artifice to defraud, or for obtaining
money or property by means of false or fraudulent
pretenses, representations, or promises, shall, for
the purpose of executing such scheme or artifice
or attempting so to do, i^lace, or cause to be
placed, any letter, postal card, package, writing,

160 Joe Mazurosky vs.

circular, pamphlet, or advertisement, whether ad-
dressed to any person residing within or outside
of the United States, in any post office, or station
thereof, or street or other letter box of the United
States, or authorized depository for mail matter,
to be sent or delivered by the post office establish-
ment of the United States, or shall take or receive
an}^ such therefrom, whether mailed within or with-
out the [122] United States, or shall knowingly
cause to be delivered by mail according to the direc-
tion thereon, or at the place at which it is directed
to be delivered by the person to whom it is ad-
dressed, any such letter, postal card, package, writ-
ing, circular, pamphlet, or advertisement, shall be
guilty of a crime."

Now as I have said before, that is the basis of the
substantive charges, Counts 1 to 6, and is also the
basis of the conspiracy charge because it is definitely
charged in each conspiracy count that the conspiracy
or agreement was to violate a particular law of the
United States, in other words the law which I have
just read to you relating to use of the mails to ac-
complish schemes to defraud.

Now in this case the Court is at this time direct-
ing you to find a verdict for the defendant upon
Counts 1, 2, 3, 5 and 6 of the indictment because the
Court does not find substantive proof upon which
you could find under those counts of the indictment
that any letter or matter was positively sent through
the United States mails. There was proof of the
custom of the banks relating to such matter upon a

United States of America 1 < > 1

certain date, hut the Court could not determine that
the particular matter went by United States mail.
i The United States has the burden of pro^dng every
i material allegation and I do not find that that al-
' legation as to those particular counts was proven,
j therefore on each of those particular counts I direct
I you to find a verdict of not guilty. That will be
i placed upon the verdict under the direction of the
Court so that there will be no question about where
(the responsibility lies. Gentlemen, as to that.
I As to Count 4 of the indictment, that is charged
as a substantive offense of the same type and there
was testimony from which you might, if you found
it proven beyond a reasonable doubt, find that a
! letter was mailed in accordance with the charge of
I that indictment. Therefore I submit that count for
lyour determination without any suggestion upon
Imy part as to which way you find upon the matter
charged. You will remember that the charge of that
(Particular count related to a check which was ob-
tained from one H. F. Belter. You have heard the

circumstances as to how it was obtained. The basis

i

of this transaction relates to a check drawn by J. C.
Adams on September 20th, 1935 for the sum of five
ihundred dollars, signed H. F. Belter and bearing
I'he endorsement of Joe Mazurosky. The previous
j^ounts of the indictment relate to the transmission
of this check, and as I have said before, I find no
proof of the mailing of this check which is sufficient
'|to submit for your consideration, but this lays the
[123] foundation for the charge contained in Count

162 Joe Macurosky vs.

4 of the indictment. This is Government's Exhibit
4. The particular count is based upon the mailing
of another check transmitting the proceeds, accord-
ing to the testimony, from the First National Bank
of Kennewick, Washington to the First National
Bank of Portland, Oregon. It is a check for $499.50
dated September 28th, 1935 and signed by J. L.
Bliss, Cashier. That is Government's Exhibit 11.

Now you must find beyond a reasonable doubt
bef oi-e you can bring in a verdict of guilty upon this
comit that the defendant had some knowledge of the
fraudulent scheme which was perpetrated upon
Belter, according to the uncontradicted evidence,
and that he participated therein and intended by his
participation to use the United States mails. He
need not directly have posted the letter himself if
that was in his contemplation that the United States
mails would have to be used by innocent persons
to carrv out his intent, and of course the bankers in
this case are shown by the micontradicted evidence
to have been entirely innocent of these schemes to
defraud, so therefore you nuist take the picture of
Joe Mazurosky at the time that he deceived and en-
dorsed this check and find out what his intent and
purpose was at the time, and then determine whether
or not he intended the United States mails to be
used by imiocent persons in consummating the
scheme, and finally determine whether or not the
United States mails were actually used in consum-
mation of the fraudulent design.

United States of America 163

You must carefully segregate from your consid-
eration in that regard the other transactions which
relate to the conspiracy. They have no relation, and
even if you should find that he was engaged in some
other conspiracy that does not necessarily mean that
he had knowledge of this particular fraudulent
' scheme, and you must take into consideration who
;the persons were involved in it, what knowledge, if
any, he had of them or of their transactions, and
determine from that what knowledge he had and
hkewise what intent he had.

I will hereafter revert to the question of circum-
stantial e^ddence, and I might as well refer to it
now. There can be no crime without a criminal in-
tent, but a person is presumed to intend the ordinary,
reasonable consequences of any act which, he volun-
Itarily does. Intent cannot be established in this
jcase — or knowledge either, for that matter — by di-
jrect evidence. The evidence upon which you must
ialways in a criminal case determine intent where
{intent is required is circumstantial, and [124] in
weighing circumstantial evidence I say that before
you can base a conviction upon circumstantial evi-
dence alone the circumstances must be inconsistent
vvith every reasonable hypothesis except that of
^uilt. That is applicable not only to this particular
l^ount, but to all the counts of the indictment.
! Now then, it has been suggested in argument that
the defendant did what he did in good faith as a
friend and a business acquaintance of the persons
kho were shown to have concocted the fraudulent

1()4 Joe Mazurosky vs.

scheme and that he had no knowledge whatsoever
that there was any false or fraudulent scheme in
connection with the check or that the acts which he
performed operated in furtherance of the scheme.
That of course, Gentlemen, is a theory which is for
your determination and your determination alone.
The issue is whether or not at the time Mazurosky
received the check, Exhibit 4, he knew that the
same had been delivered in connection with a par-
ticular scheme to defraud and that the acts which
Mazurosky did and x3erformed in connection with
receiving Government's Exhibit No. 4 and in subse-
quently receiving Government's Exhibit 11 were
acts in furtherance of the scheme to defraud, it
being essential that the government as part of the
case against the defendant Mazurosky establish be-
yond a reasonable doubt that at the time Mazurosky
performed these acts he had guilty knowledge of the
nature of the transaction in which he was engaged
and the acts which he performed were in further-
ance of the alleged scheme to defraud. In determin-
ing whether or not at the time Mazurosky received
the check and the proceeds thereof and at the time
that he received Government's Exhibit 11 he had
guilty knowledge of the transaction you are to view
the matter as it appeared to Mazurosky at the time
with the knowledge that he then had as to the par-
ticular persons in that particular transaction and
not in the light of other facts or circumstances, it'
any, which were thereafter brought to liis knowl
edge through subsequent developments.

United States of America 165

If the evidence before you establishes beyond a

.reasonable doubt that at the time Mazurosky re-

jceived the check, Government's Exhibit 4, and per-

i formed other acts in comiection with its collection

and at the time that the mails were used — if they

were used — he knew there was a scheme on foot to

defraud and nevertheless performed said acts he

was guilty of participating in the scheme, although

the evidence may show that he did not know all the

details in respect to the scheme. If on the other hand

jin receiving and handling the check he merely re-

j posed trust and confidence in the transmitter which

i was violated he is not guilty of having participated

in the scheme [125] to defraud, however unjustified

I he may have been in reposing trust or confidence

jin that person. Mere carelessness or negligence in

[trusting or having confidence in other people, how-

jever great the carelessness or negligence may be, is

'not sufficient to constitute a crime such as that

I charged in the indictment, but if the evidence con-

ivinces you beyond a reasonable doubt that Maz-

i urosky laiew that the collection of the check or any

acts done in connection therewith was in fact in

furtherance of a scheme to defraud he could not, by

failing to inform himself as to the details of the

' scheme, avoid criminal responsibility if he in fact

'knew of the scheme and performed acts in further-

I ance thereof with intent so to do.

The defendant in order to be convicted on this
count must have been a party to the use of the
United States mail, but the defendant need not
actually have posted the letter or letters or even

166 Joe Mazurosky vs.

actually have caused someone else to post a letter.
Ho must, however, have been connected mth such
use of the mails in some way, either in intent or by
act. However, if he knowingly set on foot or aided
in setting on foot a series of acts which would prob-
ably result in the United States mails being used to
complete the purpose intended and the mails were
thereby used he thus caused the use of the mails of
the United States as contemplated by the acts of
Congress upon which the indictment is based.

Tf the mails of the United States were in fact
used by the First National Bank of Kennewick,
Washington and the checks were deposited or re-
ceived without any knowledge on the part of the
banks of the alleged fraudulent scheme, nevei'theless
if the defendant now on trial caused or knowingly
aided in causing the checks to be deposited and
handled through the bank with knowledge or rea-
sonable belief that the mails would be used in their
collection and that the collection of the check and
the cashier's check transmitted as a result thereof
was a necessaiy part of the scheme, then the de-
fendant would be responsible for the use, if any, of
the mails by the banks, though the banks and their
employees were entirely innocent agents in respect
to the alleged scheme to defraud.

I think that that completes the consideration of
the one substantive count which is submitted for
your consideration. I now turn to the conspiracy
counts, which constitute Counts 7 and 8 of the in-
dictment. [126]

In Count 7 the defendant is charged ^^^th conspir-
ing, combining, confederating, and agreeing with

United States of America 161

Roy L. Martin, and it gives his aliases, Herbert C.
Crangle, and his alias, John M. Gray, who you will
remember was the witness on the stand, and Thomas
A. Andrews. Now the charge of the indictment is
that the conspiracy was to commit offenses against
the United States, to use the United States mails to
defraud in violation of Section 338, Title 18, U. S.
C. A., which is the section w^hich I read to you at the
beginning of this instruction. Gentlemen, and that
the scheme to defraud is that which is set up in the
other counts of the indictment, and I need not re-
view that to you ; then that there were certain overt
acts, and you will note that some of the overt acts
relate to the Allen check or the money given by
Clara E. Allen, a cashier's check in the sum of five
hundred dollars on the Mercantile Bank & Trust
Company of Boulder, Colorado. You have heard all
the evidence in that connection. Gentlemen. They
lalso relate to the transaction with Christine M.
Mershon which was the basis of one of the other
Icounts of the indictment which the Court has taken
jaway from you.

The second conspiracy count relates to conspiracy
between the defendant and other persons. It there-
fore is a separate conspiracy which is charged, and
in that charge it is alleged that the defendant con-
i^pired, combined, confederated, and agreed with
IPrank Faircloth, w^hom you saw on the stand as
Nelson, according to the testimony, and William H.
jLondergan, Jr. The conspiracy in this case is al-
leged to be to use the United States mails to defraud
in violation of the section which I read to you and

168 JoeMmyaroskyvs^

this particular matter relates to the charges which
were set up in Counts 2, 3, 4, 5, and 6 of the indict-
ment, that is, with relation to the transaction with
H. F. Belter.

Now it is necessary for me, Gentlemen, to define
to you what a conspiracy is, or what these words
''conspire, confederate, combine, and agree" mean.
A conspiracy is defined as follows: A conspiracy
means a combination of two or more persons by
concerted action to accomplish a criminal purpose,
and it exists when there is a combination or agree-
ment or understanding, express or iuiplied or tacit
between two or more persons for the purpose of
committing an unlawful act. It is sufficient to estab-
lish a conspiracy that two or more persons in any
manner, [127] expressly or silently, come to an
understanding to accomplish an unlawful design.
Proof of a formal agreement between the parties
is not essential to the formation of a conspiracy.
Persons entering upon criminal conspiracy do not
ordinarily put their agreements in writing, nor do
they ordinarily enter into any formal contract or
undertaking. The agreement or imderstanding may
be determined from their conduct, what they say,
what they do, and in this case you must determine
from all that whether there was a concerted action
between the persons charged, or some of them, for
the accomplishment of an unlawful purpose, and if
so that proof would be sufficient to establish the con-
spiracy. It is not necessary that either or any of
the conspirators, if you believe them to be such,
should admit that such an agreement or design

j United States of America 169

existed or that it was for an unlawful purpose or
•with an intent to commit an offense against the
I United States. All these things must be determined
by you by looking at the conduct, the association to-
gether, if any, the relationship as disclosed by the
testimony. It is sufficient if you find a concert of
action which shows an unlawful design upon the
Ipart of any two to commit an unlawful act by legal
! means or to commit a legal act by illegal means. It
as enough if it appears that there is a concert of
[action of the parties working together understand-
jingly with a common design and for the purpose of
I accomplishment of a common purpose, and this is
true Avhether each co-conspirator had knowledge of
■all the details of the conspiracy or the means used,
jbut the conspiracy nmst be for the purpose either of
i doing a lawful act by illegal means or an illegal act
iby lawful means. The material question is whether
Ithey did, acting in concert, attempt and agree or
I combine to accomplish a common purpose of this
I type, and if so, then they would all be guilty, re-
igardless of the particular part that each was to take
in the conspiracy, if any. Direct proof of the organi-
zation of a conspiracy is not necessary. It may be
inferred by the jury from the facts in the case.

However, the proof of conspiracy is not sufficient
lalone for conviction. The parties may have had such
a design or agreement, but if none of them did any-
thing to carry it out there could be no conviction
for conspiracy; in other words, if you should come
to that point then the Government would still have
to go further and prove that there was an overt act

170 Joe Mazurosky vs.

and one of the overt acts alleged in the particular
count of the indictment which was done in pursu-
ance of the unlawful [128] design and was reason-
ably effective toward carrying it out. The Govern-
ment, however, does not have to prove that nil of
the overt acts alleged in either count of the indict-
ment were done, but as to each particular count you
must first find beyond a reasonable doubt that the
conspiracy existed, that the defendant was a mem-
ber, and that one of the overt acts was done.

There must of course be two parties to a con-
spiracy. An individual alone cannot be guilty of
conspiracy. In order to constitute conspiracy there
must be unity of action or opinion. Both pai*ties
must intend to accomplish the same criminal act.
After the formation of the conspiracy and during:
the existence of the conspiracy the act of a member
thereof, one of the parties to the agreement, is then
the act of all who at the time are acting in concert
with the common thing in view. If a person becomes
a member of the conspiracy under these rules he
then remains a member up to the time that the un-
lawful conspiracy ceases, that is, until the acts are
either accomplished or fail of accomplishment or
until he by affirmative act upon his part retracts his
membership and agreement and withdraws.

Now under this indictment, however, it is not
enough that the conspiracy be directed to the attain-
ment of some unlawful object by unlawful means. It
must be directed to the attainment of the particular
object specified in the indictment, namely, in this
case as is charged, the carrying out of the scheme

' United States of America 171

tto defraud certain people as alleged in the indict-
ment, and further, there must be an agreement that
the imlawf ul means were to be used and that those
unlawful means used were in violation of the stat-
ute against the use of the United States mails to
defraud. If you should believe from the evidence in
this case that there was an agreement that the de-
fendant should cash any checks sent to him without
jany knowledge upon the part of the defendant that
the checks were to be the fruits of the particular
fraud alleged in the indictment, then as to the con-
spiracy counts you would have to find a verdict of
riot guilty, even though you believed the defendant
knew or had reason to believe that the checks were
lobtained in some illegal manner.
! Even though the defendant knew or ought to have
■known that the checks described in the indictment
iwere obtained from the particular illegal enter-
iprise, but the defendant cashed them with no intent
|and without previous arrangement or agreement to
participate in the particular fraud, but for the pur-
pose of either obtaining [129] repajnuent of money
due him by the sender or senders of the checks or
for a commission, but you do not find any agree-
ment to participate in the fraud, then your verdict
on the particular conspiracy count will be not guilty.
j Cashing checks for a commission or percentage of
:ihe proceeds, or for any other monetary considera-
tion, is not in itself a crime. As regard the con-
spiracy counts, there must be in addition, an intent
and purpose in cashing such checks to do or assist
in carrying out the fraudulent scheme or design of

172 Joe Ma^urosky vs.

which the checks are the proceeds and to partici-
pate in an agreement, express, implied, or tacit, to
that ei^pct, and therefore if you are not convinced
by the evidence that the defendant entered a con-
spiracy intending to aid in the perpetration of a
fraud when he cashed the checks, even though yon
should believe beyond a reasonable dou])t that he
knew that the checks were obtained in some illicit
enterprise, your verdict should be not guilty as to
the particular conspiracy count.

Mere knowledge of or acquiescence in the purpose
or object of a conspiracy, T;\4thout any agreement
to cooperate or to accomplish such object or pur-
pose, is not enough to constitute one a party to a
conspiracy, but if a person does an act with knowl-
edge of the existence of the conspiracy and the act
is in furtherance of the criminal design you may
take that into consideration in determining whether
or not he intended by doing the act thereby to agree
to carry out the object of the conspiracy.

Before you would be justified in finding the de-
fendant guilty, you must believe beyond a reason-
able doubt that the defendant did something other
than to do an act which furthered the object of the
conspiracy. The evidence must establish beyond a
reasonable doubt before there can be conviction that
there was an unlawful agreement and participation
therein with knowledge and consent to the agree-
ment upon the part of the defendant, but as I have
said before, if the defendant did an unlawful act
or an act in fui'therance of the conspiracy with
knowledge of the purpose and the intent of the

United States of America 173

parties thereto you might take that into considera-
tion as to whether the defendant took part in the
agreement and by that act intended to join up with
the unlawful purpose and design and do the act in
furtherance of the design.

i It is not necessary that all the conspirators be
'acquainted with each other. It may be that they
have not previously associated together. One con-
spirator may [130] know only a few of the others,
but where one knows that others are acting together
to violate the law and intentionally cooperates to
i further the object of the conspiracy he becomes a
! party to it, and w^hen men enter into an agreement
I or conspiracy to accomplish an unlawful or illegal
I act by unlawful means they become the agents for
one another and the act of one in pursuance to a
I common purpose is deemed the act of all and to
make all responsible for the act.

Now Gentlemen, as a whole you have this matter
also before you ; you understand that the theory of
I the defense is that Mazurosky was not engaged in
!any criminal design, that he cashed these checks
either without knowledge of the conspiracy or with-
out any intent to participate in any criminal design
and simply to further purposes of his own in regard
to making money by discounting the checks to a cer-
! tain amount, knowing that they must have been ob-
|tained unlawfully or they w^ouldn't have been
i brought to him, or that he did it through friend-
ship of the defendants. On the other hand, you have
ithe circumstances which have been related as to his
i connection with these parties and certain of these

174 Joe Ma^urosky vs.

checks. You have before you certain declarations
which have been testified to when investigations
were made as to certain of these checks. You may
take that all into consideration, Gentlemen, insofar
as it relates to either count of the conspiracy and
from that you must make up your mind as to the
guilt or innocence of the defendant.

The defendant in this case has not taken the
stand. That circumstance, however, raises no pre-
sumption whatsoever against him in this case. The
Government is bound to prove its case beyond a
reasonable doubt and it can't ask for any assistance
from the defendant. You will try the case from the
Government's evidence alone and determine whether
or not beyond a reasonable doubt it convinces you
of the guilt of the defendant as to each count which
I submit for your consideration.

There was certain evidence. Gentlemen, given on
the stand as to the transactions which took place
which was given by men who, if their testimony is
to be believed, were accomplices in this affair of the
defendant, in other words they claimed to be co-
actors with him in an illegal scheme, and their tes-
timony is to be looked upon with great care and
caution. They themselves are involved in these
criminal acts and they confess it, and then they tell
you about the defendant. Now the only thing I say
to you about it is that you should approach that
testimony with great [131] care and caution. If in
view of the corroboration, if any, that was given or
even on account of the attitude of the witnesses on
the stand you believe that you can accept their tes-

United States of America 175

timony it is proper testimony for your considera-
tion, but you must weigh them and the surrounding
circumstances and the amount of corroboration be-
fore you can extend to them the credit that is ordi-
naril}^ given persons who are not claiming to be ac-
complices.

Likewise certain of these witnesses have admitted
that they are under conviction of a felony, and that
you may weigh, Gentlemen, in determining w^hether
or not you give to them the credibility that you
would to a man who w^as never previously convicted.
The law also says that that is a circumstance to be
given great weight in determining the credibility
that you give to a witness, whether he has been pre-
viously convicted of a crime, because the law says
that normally speaking he isn't as entirely credible
as a person who has not previously been convicted
of a crime. Of course, Gentlemen, the credibility of
the witness is for you, and if after looking at him
on the stand and considering his testimony and
whether there is any corroboration or not you de-
termine that you give him full credit then you may
accept his testimony, irrespective of these other
matters which I have now suggested to you.

You are the sole and exclusive judges of the facts
in the case and of the credibility of all the wit-
nesses. Your power of judging the effect or value of
evidence, however, is not arbitrary, but must be
exercised with legal discretion and in subordination
to the rules of evidence.

The testimony of any one Avitness to whom you
give full credit and belief is sufficient to establish
any issue in this case. You are not bound to accept

] 76 Joe MazurosJcy vs.

the testimon}^ of any number of witnesses which
does not produce conviction in your minds as
against the testimony of a less number or against a
presumption or other evidence which does convince
you.

Every witness is presumed to speak the tinith.
That presumption, however, may be overcome by
the manner in which he testifies, the interest that he
may have in the outcome of the case, or by contra-
dictory evidence. You may take into consideration
the attitude of a witness on the stand and the char-
acter of the things that he is telling. If a witness
has testified falsely in any one material paii: of his
testimony, and if you find that a witness has testi-
fied wilfully false then it will [132] by your duty
to entirely disregard all the rest of his testimony
unless it is corroborated by other evidence which
you do believe.

Any fact in the case may be proven by direct or
indirect evidence. Direct evidence is that which
proves a fact in dispute directly, without any infer-
ence or presmnption as to its existence. The testi-
mony of an eye witness to a transaction is direct
evidence. Indirect evidence is also competent, that
is, evidence which tends to prove one fact by prov-
ing another but which does not necessarily prove
the fact but affords an inference or presumption of
its existence. As I have said before, that evidence
is entirely competent and sometimes is more con-
vincing than direct evidence, but before you can find
a verdict of guilty on any coimt of this indictment
where the evidence is entirely circumstantial then
it must be inconsistent with every reasonable hypo-
thesis except that of guilt.

United States of America 111

There are certain phases of the testimony here
which relate to oral admissions of the defendant.
That is competent evidence for your consideration;
however, that sort of thing must be viewed with
great caution. The defendant himself may have been
mistaken or the witness may have misunderstood
him or may have somehow misreported what the de-
fendant said. Of course if you do find that the ad-
mission was made — or the statement was made in
the exact words given to you, then you are entitled
to give it great weight, because the defendant better
than anyone else knows what his connection with
this transaction was.

The evidence should be weighed in the light of
the evidence which is within the power of one side
to produce and the other to contradict, therefore if
you find that one party has produced evidence of
less weight when it was within their power to pro-
duce evidence stronger and better you have a right
to look with distrust upon the evidence offered.

I think that fairly sums up, Gentlemen, the rules
of law to apply in this case. I have not attempted
any summary of the testimony or any suggestion
as to how you should find upon any of the issues in
this case, but simply have given you the rules of
law, and with that I shall submit the case with en-
tire confidence that you will render a fair verdict.

Are there any exceptions'?

Mr. Biggs: No exceptions. Your Honor. [133]

Mr. Strayer : There is one matter in the first part
of your Honor's charge; if I understood your
Honor correctly you instructed the jury before it
could find a verdict of guilty on the substantive

178 Joe MazurosUy vs.

count they must find an intent to use the mails, and
later on in your charge I think you instructed dif-
ferently in that regard, and I thought some con-
fusion may have arisen in the jurors' minds as to
what the charge was on the substantive count as to
the intent to use the mails.

The (^ourt : I think I will not put any great em-
phasis on that. I think I will submit it just as the
instructions were given.

You will have with you in your jury room,
Gentlemen, the indictment in this case, the exhibits
which have been introduced in evidence, and two
forms of verdict. Now Gentlemen, one of these
forms of verdict I won't review with you. It simply
says that by direction of the Court you find the de-
fendant not guilty on Counts 1, 2, 3, 5, and 6, but
it will have to be signed by your foreman at the
time you return the other verdict.

The other verdict on the coimts which I am su])-
mitting for your determination, omitting the formal
portions, reads as follows:

'*We, the Jury, duly impaneled and sworn to try
the above entitled cause, do find the defendant, Joe
Mazurosky, blank guilty as charged in Count four
of the indictment herein; blank guilty as charged
in Count seven of the indictment herein ; and blank
guilty as charged in Count eight of the indictment
herein. Dated at Medf ord, Oregon, this blank day of
March, 1938. Blank line, foreman."

Now% Gentlemen, if you find that the Government
has failed to prove beyond a reasonable doubt any
one of these counts which I am submitting for your

United States of America 179

determination you will fill the word **not" in the
blank before the words '^ guilty as charged" in the
particular count, and if on the other hand you find
that the Government has proved its case as to any
one of these three comits you will leave that blank
empty and allow the wording to stand as it is at
present as to that particular count.

In any event, Gentlemen, each of these verdicts
will be signed by your foreman alone, and since this
is a case that is being tried in the Federal Court
you must find a unanimous verdict. [134]

The foregoing Bill of Exceptions contains all the
material evidence offered and received on the trial
of said cause, including all rulings made during the
course of trial which were excepted to by the de-
fendant, and exceptions allowed by the Court.
EDWIN D. HICKS

Attorney for Defendant and
Appellant. [135]

It is hereby certified that on the 18th day of
April, 1938, the Honorable James Alger Fee, based
upon stipulation of counsel, and for good cause
shown, entered an Order allowing defendant to have
to and including the 1st day of May, 1938, for settle-
ment and filing of Bill of Exceptions, and Assign-
ments of Error in respect to the within appeal.
It is hereby certified that the foregoing proceed-
; ings were had upon the trial of this cause, and that
: the Bill of Exceptions contains all of the evidence
produced at the said trial.

180 Joe Mazuroshy vs.

It is further certified that the foregoing Excep-
tions asked and taken by the defendant, were al-
lowed by the Court, and that the Bill of Exceptions
was duly presented within the time fixed by law and
the Order of this Court, and is by me duly allowed
and signed this 23rd day of April, 1938.
JAMES ALGER FEE,

Judge of The District Court
of the United States, For the
District of Oregon. [136]

State of Oregon,

County of Multnomah — ss.

Due service of the within Bill of Exceptions is
hereb}^ accepted in Multnomah County, Oregon, this
16th day of April, 1938, by receiving a copy thereof,
duly certified to as such by Edwin D. Hicks, of At-
torneys for Defendant and Appellant.

J. MASON DILLARD

Attorney for United States of
America.

[Endorsed]: Lodged April 16, 1938. Filed
Apr. 25, 1938.

[Endorsed] : Filed May 2, 1938. Paul P. O'Brien,
Clerk. [137]

[Title of District Court and Cause.]

ASSIGNMENTS OF ERROR

Joe Mazurosky, being the defendant in the above
entitled cause, and the appellant herein, appearing
by Edwin D. Hicks, his attorney, and having filed a

United States of America 181

notice of appeal, as required by law, that the de-
fendant appeals to the United States Circuit Court
of Appeals for the Ninth Circuit, from the final
order and judgment made and entered in said cause
against the said defendant herein, now makes and
files, in support of said appeal, the following as-
signments of error, upon which he will rely for a
reversal of said final order and judgment upon the
said appeal, and which errors are to the great detri-
ment, injury and prejudice of this defendant, and
said defendant says that in the records and pro-
ceedings, upon the hearings and determination
thereof in the District Court of the United States
for the District of Oregon, there is manifest error,
in this, to-wit:

Assignment of Error No. 1
The Court erred in over-ruling defendant's mo-
tion for a directed verdict as to Counts four, seven
and eight of the indictment made at the conclusion
of the case after all parties had rested, for the
reasons therein set forth:

Mr. Biggs: "The Government having rested and
the defendant at this time resting, moves the Court
for its order directing a verdict of not guilty as
to each of the counts in the indictment, on the
gromid and for the reason that there is no sub-
stantial evidence sufBcient to submit to the jury
which establishes or tends to establish the connec-
tion of the defendant with any [138] scheme or arti-
fice to defraud, or the particular scheme or artifice
to defraud described and set forth in each count
of the indictment, or the use of the mails pursuant

182 Joe Ma^urosky vs.

to said scheme, there being no conscious participa-
tion of the defendant in such scheme. With respect
to the count of the indictment relating to the de-
fendant's alleged connection with Roy Martin, John
Gray, and others, for the further reason that there
is no testimony whatsoever connecting the defend-
ant with any criminal de"\dce, scheme, intent, or
plan on their part, all of the testimony admitted
being the testimony of acts or declarations of al-
leged co-conspirators, and there is an inadequate
prima facie showing of a conspiracy.

''The Court: Which count is that, now?

"Mr. Biggs: That is Coimt 1 of the indictment,
Your Honor, and also Comit 7 of the indictment,
being the conspiracy count, and for the further
ground that there is no substantial evidence that the
United States Mails were used by the defendant
voluntarily or involuntarily or at all in connection
with this.

"Thereupon the following proceedings were had:

"The Court: The Court at this time denies the
motion for a directed verdict as to Counts 4, 7 and
8 of the indictment, and grants the motion as to
Counts 1, 2, 3, 5 and 6.

"Mr. Biggs: Does the Court desire a verdict to be
prepared on those coimts?

"The Court: No, it can be included in the general
verdict.

"Mr. Biggs: And may we have an exception to the
Court's ruling as to Coimts 4, 7 and 8 of the in-
dictment ?

"The Court: Yes."

United States of America 183

Assignment of Error No. 2
That the Court erred in permitting the witness
for the United States of America, Mr. Frank
Nelson, to testify as follows:

Questions by Mr. Dillard : [139]

''Q. How did Mr. Wagner happen to give you a
check for Five hundred ($500.00) Dollars?

''A. I called on Mr. Wagner at his home

"Mr. Biggs: Just a moment, the defendant objects
to the introduction of any testimony concerning the
manner or means or time or place of the taking of
that check. It is now shown to be set up in the in-
dictment. It is not the basis for one of the charges
made in the indictment; it is dated, as already
identified, some thirteen years prior to the indict-
ment and some nine years prior to the date the al-
leged conspiracy commenced, and therefore is too
remote to be admitted under the theory of any simi-
lar transactions, if that is what is claimed for it.

"Mr. Dillard: It is offered, Your Honor, to show
knowledge on the defendant. It will develop that —
well, it is offered to show knowledge.

"The Court: The Court will admit the testimony
in view of the matters that have been already testi-
fied regarding Government's Exhibit 7.

"Mr. Biggs: May we have an exception to the
Court's ruling?

"The Court: Yes.

"Frank Nelson: I came into possession of the
Wagner check, Exhibit 7, under the following cir-
cumstances : I called on Mr. Plmnmer at his home,
introduced myself as a local optometrist from Van-

184 Joe Mazurosky vs.

couver, Washington, and examined his eyes and told
him that he had a trouble that I really didn't under-
stand myself, that he should consult an eye, ear,
nose and throat specialist, and I asked him if he
knew anybody in Vancouver or Portland that he
was personally acquainted with that he cared to go
see, and he said that he didn't, so I told him about
a party that was with me that was an eye specialist
and that if he would go out and ask him to come in
that he might give what information he needed, so
he did that. I told him my partner (Dr. Brown)
was Dr. Ainsworth. He called Brown into the house
and Brown [140] performed an operation for him
on his eye. At that time we were using the skin of
an egg. He put that on the eye and removed it from
the eye, and showed it to him and charged him Six
Hundred Seventy-five ($675.00) Dollars, I think it
was. We got two checks, one for One Hmidred sev-
enty-five ($175.00) Dollars, and one for Five hmi-
dred ($500.00) Dollars. The one for $175.00, Dr.
Brown cashed at one of the banks in Vancouver,
Washington. I took the other Wagner check to an-
other bank and he refused to cash it, but the banker
certified the check. I am referring now to Exhibit 7
for identification. When he refused to cash the
check, I gave it to my partner, Dr. Brown, and
from that day until last year I never saw the check
any more. Dr. Brown was a friend of Mr. Mazur-
osky as well as myself. He was the gentleman who
had the store next door to Mazurosky's store, the
optical store." [141]

United States of America 185

Assignment of Error No. 3
That the Court erred in permitting reception into
the evidence of Exhibit numbered 7, offered and
received in behalf of the United States of America
under the following circumstances :

Questions by Mr. Dillard:

Mr. Dillard: If Your Honor please, we will offer
in evidence Government's Exhibits for identifica-
tion 4, 5, 7 and 26.

The Court: Any objection'?

Mr. Biggs : If the Court please, the defendant ob-
jects to the introduction of these checks on the
ground and for the reason that there has been no
evidence sufficient to connect the defendant mth the
manner and method and means by which these
checks w^ere taken or for any other purpose, and I
assume they would be immaterial if they were not
offered for the purpose of connecting the defendant
with that transaction; as to Exhibit 7, on the
further ground and for the further reason that it
is in connection with a transaction occurring more
than thirteen years prior to the date of the offer,
and upon that ground it is too remote to have pro-
bative force.

The Court: All these checks have the defendant's
signature and they are admissible in evidence. Ad-
mitted. Exception allowed.

(The documents heretofore marked Govern-
ment's Exhibits 4, 5, 7 and 26, respectively, for
Identification were thereupon received in evi-
dence.)

186 Joe Mazurosky vs.

There was thereupon received in evidence, Exhibit
of the United States of America, numbered 7, which
is in words and figures as follows, to- wit:

GOVERNMENT EXHIBIT 7

98-37
Vancouver, Wash. Nov. 14, 1925
Washington Exchange Bank

Payment stopped.
Pay to the

Order of O. A. Plummer $500.00

Five Hundred 00/100 Dollars

Exactly Five Hundred Dollars Exactly Exactly
HENRY WAGNER
Good for $500.00

When properly endorsed
Lloyd DuBois
P.M.
Nov. 18, 1925

(Endorsed on Back) O. A. Plmnmer O. A. Plummer

Henry Wagner C-15297
O. A. Plummer
Joe Mazurosky Cancelled
786 Kearney St.
Be 5581 [142]

Assignment of Error No. 4
That the Court erred in permitting tlie witness
for the United States of America, Mr. Henry
Wagner, to testify as follows:

Questions by Mr. Strayer:

Q. Mr. Wagner, will you just tell the jury the
circumstances imder which you made out and de-
livered that check?

United States of America 187

Mr. Biggs: If the Court please, we object to the
introduction of this testimony on the ground that
it was to do with a transaction in the absence and
not in the presence of this defendant, there being no
sufficient f oimdation made connecting the defendant
with the transaction or showing knowledge of the
transaction.

The Court: The objection is overruled.

Mr. Biggs: And may we have an exception?

The Court: Exception allowed.

Mr. Biggs: Could a continuing objection to this
testimony go on, Your Honor, to prevent the neces-
sity of constant interruption?

The Court: You will have to object to the testi-
mony of each witness.

Mr. Biggs: But it may be a continuing objection?

The Court: As far as the testimony of the par-
ticular witness.

Mr. Biggs: Thank you.

There were two men came to my farm on the 14th
day of November, 1925, who said they were eye
doctors that tried to sell us glasses. I wasn't in need
of any glasses, but my brother, William, did need
them; his eyes were failing and they examined his
eyes and discovered that there was something wrong
and finally found it was a cataract — told him it was
a cataract, and said that it would have to be re-
moved or else he would go blind, and so he sub-
mitted to the operation to remove the imperfection
in his eye. Before they did that I asked them what
it would cost to remove it and they said it would be
nominal, the price would be nominal, and so they

1 88 Joe Maeuroshy vs.

went to work and removed it and when they got
through the bill was Seven Hundred Fifty ($750)
Dollars.

They had an instrument about a foot long, a sort
of rod, and they worked around in his eye \vith that
and removed something that looked like the white of
an e:g^, and they called that the cataract. That was
the operation that was performed. [143] These
parties were using the names of Dr. O. A. Plummer
and Dr. J. C Ainsworth. Mi*. Plummer was a tall,
slim man, rather dark, about 35 or 40 I should
judge. I believe I saw him today. The other wasn't
near as tall, was older, heavy set with a sloping fore-
head at a conspicuous angle. The older man per-
formed the operation. When they said they wanted
$750.00 I objected. They said radium was used to
remove the cataract and that the value of the
radium used in the operation was Six hundred fifty
($650.00) Dollars. They reduced the bill to Six hun-
dred fifty ($650.00) Dollars and I wrote out two
checks, this one and another for One hundred sev-
enty-five ($175.00) Dollars, making a total of Six
Hundred Seventy-five ($675.00) Dollars. The checks
were handed over to Mr. Plummer. I did not see
them after I delivered the checks. One of the checks
was cased, the $175.00 one. I next saw the $500.00
check at Mr. Dubois' in the bank." [144]

i

United States of America 1B9

Assignment of Error No. 5.
That the Court erred in permitting the witness
for the United States of America, Mr. William
Wagner, to testify as follows :

Questions by Mr. Stray er:

My name is William Wagner, brother of Henry
Wagner, and we live near Vancouver, Washington.
I recognize the check you have handed me, Exhibit 7
for identification.

Q. Do you recall the circumstances under which
that check was made out and delivered *?

A. Yes, sir.

Q. Will you just tell the jury about it?

Mr. Biggs: If the Court please, for the purpose
of the record we object to the introduction of this
testimony on the grounds assigned with respect to
the testimony of the brother.

The Court: The objection is overruled.

Mr. Biggs : And that will go to all the testimony
on the further ground of remoteness?

The Court: Overruled. Exception allowed.

Mr. Strayer: Q. Tell us the circumstances
under which your brother made out and delivered
that check.

Well, this check was written for eye doctors.
There were a couple of them, Plummer and Ains-
worth, and they examined our eyes and told me I
had a cataract on one of my eyes and if it wasn't
removed I would go blind in a short time. It scared
me, of course, and it scared my brother, and we is-
sued this check in payment for the operation. The
check was made out by my brother in my presence.

190 Joe Ma^uroshy vs.

The check was delivered to Phimmer. The check was
never paid. I have seen neither of the men since
then. The operation didn't help "one bit." [145]

Assignment of Error No. 6
That the Court erred in permitting the witness
for the United States of America, Mr. John M.
Gray, to testify as follows :

Questions by Mr. Strayer:

Q. What did Martin tell you as to what he had
done with the Merson check?

Mr. Biggs: If the Court please, we object to the
witness answering that question on the gromid that
it would be hearsay, there being no sufficient or any
prima facie showing of any partnership in crime
or otherwise between Mr. Martin and Mr. Mazur-
osky, and therefore no sufficient foundation laid for
the introduction of any statements, declarations, or
evidence of any acts of omission of commission done
in the absence and out of the presence of the de-
fendant.

The Court: The objection is overruled.

Mr. Biggs: And may we have an exception?

The Court : Yes.

A. My conversation with Roy Martin was that
he mailed the check to Joe Mazurosky.

Mr. Strayer: Q. And did he tell you anything
about the arrangement with Joe Mazurosky?

Mr. Biggs : If the Court please, may we make the
same objection and have the continuing objection
to any testimony asked for and given by this wit-
ness in connection with statements or evidence of
facts or declarations on the part of Martin?

United States of America 191

The Court: Yes.

Mr. Biggs : I make the same objection at this time,
Your Honor.

The Court: The objection is overruled.

Mr. Biggs: And may I have an exception?

The Court: An exception is allowed.

Mr. Strayer: Q. WhSii did he tell you?

A. It would cost me fifteen per cent (15%) to
get the check cashed through Joe Mazurosky.

As I previously stated, my arrangement with Mrs.
Martin was that she would go down with me to Joe
Mazurosky 's and we would obtain this money and
I would take my part of the money and Mrs. Martin
was to keep his part of the money. [146]

Q. And under your agreement with Martin what
percentage of the check were you to receive?

A. I received a total of sixty (60%) per cent.

Q. And what was to be done with the balance of
the money?

A. Fifteen (15%) per cent would go to Joe
Mazurosky for collection, twenty-five (25%) per
cent to Martin and Cragle, and sixty (60%) per
cent to Nelson and myself.

We were paying Martin and Crangle twenty -five
(25%) per cent for advance information concern-
ing these people.

Referring to the time when I received the Mer-
shon check on October 29th, after having a conver-
sation probably one or two days previous to that
with Mr. Martin and Mr. Crangle, they told me
circumstances of a fake cataract operation on Mrs.
Mershon, or Mr. Mershon, one or the other of them.

192 JoeMaziirosky vs.

I went to the home of these people on this date and
made an examination of the party that was sup-
posed to be operated on, I don't recall which one
now. I remember explaining that I was there for
the purpose of giving them back the money in the
event that it wasn't cured, that the doctor that oper-
ated on them had had an accident of some kind and
probably was killed ; anyhow, after my examination
I told them it wouldn't be cured without the use of
a radium belt and explained to them a radium belt
was very valuable, only twelve of them in the
United States ; the doctor that made them had died
with the secret. The windup of the conversation was
that they deposited this amount of money witli me
as surety, one of these belts to be delivered to their
home and used for a period of thirty days, and that
is how I obtained the check.

To my knowledge there was no such thing as a
radium belt. There was nothing more the matter
with these people than senility or old age. At the
time I talked with them I was using the name. Dr.
Pierce. I also went by the names of Miles, Hamil-
ton, Howard, Clayton, Cox and others. T understood
that the name T. A. Andrews was the correct name
of the party who was with me. He also went by the
name of Thomas, Judge Thomas, and I so intro-
duced him to the Mershons. I represented Thomas
as an attorney, settling the estate of the doctor who
had been killed and who had performed the opera-
tion on their eyes. Thomas is at this time in a
Federal Penitentiary in [147] Virginia. I imder-
stand Rov Martin and Herbert Crangle are in the

United States of America 193

Federal penitentiary at Atlanta, Georgia. Oangle
usually went by the name of Dr. Avery. Martin,
when performing the operations, usually was rep-
resented as Dr. Miles.

Referring back to the time when I received the
proceeds of the Mershon check, I will state that I
met Mr. Mazurosky about a week thereafter, for
the f]rst time. I was introduced to him by Roy
Martin at the St. Andrews Apartment Hotel in
Portland, Oregon.

Q. And what were you doing there at the St.
Andrews Apartment Hotel?

A. Mr. Martin was living there at the hotel. I
was down there to see him and I just met Mr. Maz-
urosky, that is all.

The Allen check, Exhibit 3 for identification,
which you have handed me was received by me
sometime in September, 1934. I went to the home
of Clara Allen and her brother somewhere aroimd
Boulder, Colorado. The Exhibit is a cashier's check.

Mr. Strayer : Q. And how did you receive pos-
session of it?

A. T. A. Andrews and I drove to the home of
Clara Allen and her brother, out of Boulder, Colo-
rado, and I talked to Miss Allen and her brother
and performed a socalled fake cataract operation on
the brother's eye and went to town to get this
money. She drove her car and we followed in an-
other car. She didn't have the money in the bank.
They had some Liberty bonds and these were at the
bank in the name of the brother and she couldn't
obtain these bonds, so she had to go back home and

194 Joe Maznroshy vs.

get an order for them, and it was then too late to
get the bonds out of the bank that day so I in-
structed her to go the follo^^4ng day and get the
bonds or the cash money and I would be back in a
few days to get it, but I didn't. I waited a couple
of weeks and I sent Mr. Andrews out there early on
Sunday morning. That day ho returned with the
check and gave it to me. I received the check from
T. A. Andrews about twelve or fifteen days after
the date noted on the check. I was working with
Andrews at that time.

I performed the operation on Miss Andrews'
brother. Due to senility, his vision was dim and I
explained to him that I could make him see with
radium treatment. I dropped a few drops of Murine
eye w^ater into his eye and removed a piece of skin
that I had — I was supposed to have removed it —
and that was all there was to it. He did have a
cataract but I did nothing about it. The check was
given me in payment for the [148] operation. I was
using either the name of Miles or Pierce, I am not
sure which. Andrews was using the name of
Thomas. Miss Allen's brother received no benefit
from the operation. After receiving the check, I
gave it to Roy Martin. He told me he could send it
to Portland for collection and it would cost me fif-
teen (15%) per cent. He told me he was going to
send it to Joe Mazurosky. He wrote him a letter
and put it in an envelope and dropped it in a mail
box in Denver, Colorado. After he mailed the letter,
I later receiA^ed the proceeds of the check. Mr.
Martin gave me Five Hundred ($500) Dollars less
fifteen (15%) per cent, which is Seventy-five ($75)

United States of America 195

Dollars, in Seattle — a few dollars less than that
because he told me that the money had been wired
to him. That was about the first or second week in
October, 1934. I went back to see IVIiss Allen in 1935.
When I was there the first time they had two thou-
sand dollars in Liberty bonds and I went back there
to get the balance of them if I could. I talked to
Miss Allen ; found her in the cow pen milking a cow.
It was early in the morning. I went in and talked
to her and she didn't recognize me. As soon as I
began to talk about eyes she told me she had been
swindled out of Five Hundred ($500) Dollars and
if I would go down town and talk to the district
attorney he would tell me all about it, and so that
was all I wanted to know and I drove awa3\ She
did not recognize me as one of the men who had
been there before. I wore no disguise.

(The check, Government's Exhibit 15 for
Identification, was thereupon marked.)

The first time I ever saw the exhibit marked Gov-
ernment's Exhibit 15 for identification was at the
trial in Portland. I can't say that I recognize the
handwriting. When Martin sent the checks to Joe
Mazurosky, he used the name of R. E. Terrell. [149]

Assignment of Error No. 7
The Court erred in denying defendant's Motion
for directed verdict as to Counts seven and eight
of the indictment, in that the evidence adduced at
the trial disclosed but one single conspiracy and
the defendant cannot be convicted of two con-
spiracies upon a showing that there was but one
conspiracy in existence. [150]

196 JoeMazuroskyv&.

Assignment of Error No. 8.
The Court erred in submitting count seven of the
indictment for consideration by the jury for the
reason that said count does not state facts sufficient
to constitute a crime, in that:

(a) It is not alleged in said count that the use
of the United States Mails was a part of and/or
was embraced within the terms of the alleged con-
spiracy therein set forth.

(b) It appears affirmatively from the allegations
of said count that said alleged conspiracy did not
embrace or include by its terms the use by said con-
spirators of the United States Mails in furtherance
of the scheme to defraud, set forth in said count.

[151]

Assignment of Error No. 9.

The Court erred in submitting coimt eight of the

indictment for consideration by the jury for the

reason that said count does not state facts sufficient

to constitute a crime, in that :

(a) It is not alleged in said count that the use
of the United States Mails was a part of and/or
was embraced within the terms of the alleged con-
spiracy therein set forth.

(b) It appears affirmatively from the allegations
of said count that said alleged conspiracy did not
embrace or include by its terms the use by said con-
spirators of the United States Mails in furtherance
of the scheme to defraud, set forth in said count.

[152]

Wherefore, the defendant and appellant prays

that the judgment in said cause be reversed and the

United States of America 197

cause be remanded with instructions to the trial
Court as to further proceedings therein, and for
such other and further relief as may be just in the
premises.

EDWIN D. HICKS

Attorney for Defendant and

Appellant. [153]

State of Oregon,

County of Multnomah — ss.

Due service of the within Assignment of Errors
is hereby accepted in Multnomah County, Oregon,
this 20th day of April, 1938, by receiving a copy
thereof, duly certified to as such by Edwin D. Hicks,
of Attorneys for Defendant and appellant.
J. MASON DILLARD

Attorney for United States of
America.

[Endorsed] : Filed April 20, 1938.

[Endorsed]: Filed May 2, 1938. Paul P. O'Brien.
Clerk. [154]

[Endorsed]: No. 8809. United States Circuit
Court of Appeals for the Ninth Circuit. Joe Maz-
urosky. Appellant, vs. United States of America,
Appellee. Transcript of Record. Upon Appeal
from the District Court of the United States for
the District of Oregon.

Filed May 2, 1938.

PAUL P. O'BRIEN,

Clerk of the United States Circuit Court of Appeals
for the Ninth Circuit.

No. 8809

IN THE UNITED STATES

Circuit Court of Appeals

FOR THE NINTH CIRCUIT

JOE MAZUROSKY
Appellant

V8,

UNITED STATES OF AMERICA
Appellee

Upon Appeal from the United States District Court
for the District of Oregon

BRIEF OF APPELLANT

Edwin D. Hicks
Hicks & Adams

515 Pacific Building, Portland, Oregon

Attorneys for Appellant
Cakl C. Donatjgh

United States Attorney for the District of Oregon

J. Mason Dillard and Manley Strayer

Assistant United States Attorneys for the District of Oregon
506 United States Court House, Portland, Oregon

Attorneys for Appellee

PAUL F- O'BRieN,
OL&RK

CO. rORTUND

INDEX

Page

Jurisdiction 1

Statement of the Case 2

Questions Presented ......... 5

Specification of Assigned Errors 6

Pertinent Statutes 7

Summary of the Evidence 7

Argument 21

1. There was no substantial evidence suffi-
cient to warrant submission to the jury of
Counts numbered IV, VII and VIII of
the indictment 21

(a) Argument directed to Count IV of
the indictment 23

(b) Argument directed to Counts VII
and VIII of the indictment ... 39
(i) Intent to use the mails .... 40
(ii) Proof of defendant's participa-
tion as a member of the conspiracy
charged in Count VII of the in-
dictment 46

(iii) Proof of defendant's participa-
tion as a member of the conspiracy
charged in Count VIII of the in-
dictment 55

II. Error was committed in allowing recep-
tion in evidence of the testimony and the
exhibit mentioned in assignments of error
numbered II, III, IV and V .... 59
III. Error was committed in allowing recep-
tion in evidence of the testimony men-
tioned in assignment of error No. VI . . 64

Conclusion 68

Appendix 71

u

INDEX TO CITATIONS

Cases : Page

AUen V. United States, 4 F. (2d) 688 ., . 53

BeU V. United States (C. C. A. 8) 2 F. (2d) 543 52, 53
Brady v. United States, 24 F. (2d) 399 (CCA. 8) 54
Brooks V. United States, 146 F. 223 (C C A.

8), Syll. 1 45

Brown v. United States, 14 S. C 27, 39, 150 U.

S. 93, 98, 37 L. Ed. 1010 63

Coffin vs. United States, 156 U. S. 432, 458, 460,

15 Sup. Ct. 394, 39 L. Ed. 481 38, 50

Cooper V. United States, 9 F. (2d) 216 (CCA. 8) 61
Crawford v. United States, 212 U. S. 183, 203,

53 L. Ed. 465, 29 S. C 260 68

Dalton V. United States, 154 F. 461 (C C A. 7) 37

Deery v. Cray, 5 Wall. 795, 807, 808, 18 L. Ed. 653 68
Dickerson v. United States, 18 F. (2d) 887 (CCA 8) 52
Douglas V. Fed. Res. Bank, 271 U. S. 489, 492,

46 Sup. Ct. 554, 556, 70 L. Ed. 1051 (1935) 27

Farmrs Bank & Trust Co. vs. Newland, 31 S.W.

38, 39, 97 Ky. 464 34

Farmer v. United States, 223 F. 903 (C C A.

2), cert, denied 238 U.S. 638, 59 h. Ed. 1500,

35 S. C 940 41, 44

Federal Reserve Bank of Richmond v. Mallov

et al., 264 U. S. 160, 44 Sup. Ct. Rep. 296,

68L. Ed. 617 30,35

First National Bank v. Comm. Bank & Trust

Co. 242 Pac. 356, 358, 137 Wash. 355 . . 33

Cargotta v. United tates, 24 F. (2d) 399 . . 54

Hendry v. United States, 233 F. 5, 13 rC.CA. 6th) 61
Iponmatsu Ukichi v. United States, 281 F. (2d)

525 rC. C. A. 9) 53

Jav V. United States, 35 F. (2d) 553, 554 (C

C A. 10) 61

lU

INDEX TO CiTATiONS— Continued

[ Jennings et al. v. United states i^'idelity (fc
I Guaranty C.o., 2^4 U. «. 215, 5d «up. Ut.

Kep. 394, 7y i^. Ed. 8b9 (1935; . . . . 26, 28
Ketterback v. United (States, 202 E. 377 (CCA. 9) ' 62
Kulni V. United States, 26 h\ (2d) 463

I (C-C. A. 9) 41,53,67

Lane v. United States, 34 F. (2d) 413, 416

i,. (C.C.A.8) \ . . 63

I Lmde v. United States, 13 F. (2d) 59 (CCA. 8) 51 53
Loland V. Nelson, 139 Ore. 581, 585, 8 Pac. (2d) 82 ' 34
Lonabaugh v. United States, 179 F. 476 (CCA 8) 50 58
Lucadamo v. United States, (CCA) 280 F. 653, 657 ' 53
Marcante v. United States, 49 F. (2d) 156 157

(CCA. 10) ; . ' 64

Marshall v. Wells, 73 Am. Dec. 381 . . 34

: Mayola v. United States, 71 F. (2d) 65

(^'- C A. 9) ..... QQ Qrj gg

McKelvey v. United States, 241 F. 801 . ' ' 44

Mmner v. United States, 57 F. (2d) 506 511

: (CCA. 10) . . . //. : 64

Morris v. United States, 7 F. (2d) 785 (C.C A 8) 44
^ Newland v. First National Bank of Kansas

! City, (C. C. A. 8), 64 F. (2d) 399, 402 . 27

Packer v United States, (C. C. A. 2), 106 F. 906 60
i Peck V. Heurich, 167 U. S. 624, 629, 17 S Ct

' 927, 42 L. Ed. 302 . . 68
Painwater V Federal Reserve Bank of St. Louis,

290 S. W. 69, 172 Ark. 631 . 34

Piddell V. United States, 244 F. 695, 700 rCCA 9) 60

Samuels v. United States, (CCA. 8), 232 F 536 60
bavao-e v. United States, rCCA. 8th, 1920)'270
j i|. 14. cert, denied ri921) 257 U. S. 642 42

! Sup. Ct. 52, 66 L. Ed. 412 . . ' 24

Schaffer v. Commonwealth, 72 P. St 60 ' 62

b)chwnrtzberg v. United States, 241 F. 348 (CCA 2) 43

IV

INDEX TO CITATIONS— Continued

Shea V. United States, 251 F. 440, cert, denied

248 U. S. 581, 39 Sup. Ct. 132, 63 L. Ed. 431 25, 60
Spear v. United States, (C. C. A. 8th, 1917),

240 F. 250, cert denied (1918) 246 U. S. 667,

38 Sup. Ct. 335, 62 L. Ed. 529 24

Spillers v. United States, 47 F. 2(d) 893 (CCA. 5) 28
Stubbs V. United States, (CCA. 9), 249 F. 571,

161 C. C. A. 497 44, 51, 52, 53

State V. Wilson, 113 Ore. 450, 233 Pac. 259 . . 60, 62
Sutherland v. United States, 92 F. (2d) 305,

306 (C. C. A. 4) 61

Terry v. United States, 7 F. (2d) 28, 30

(CCA. 9) 37,49,61,63,64

Todd V. United States, 221 F. 205, 208 (CCA. 8) 68
Turinetti v. United States, 2 F. (2d) 15 (CCA. 8) 49
United States v. Baker et al., 50 F. (2d) 122

(C C A. 2) 36

United States v. Cole, (D. C) 153 F. 801, 804 53

United States v. Heitler et al., (D.C) 274 F. 401 52, 53
United States v. McCrary, 175 F. 802, Syll. 1 . 46

United States v. Ross, 92 U.S. 281, 284, 23 L. Ed. 707 54
Vernon v. Unitd States, 246 F. 121, 123 (8th) . 49

Ward V. Smith, 7 Wall. 447, 452 (19 L. Ed. 207) 31
Willsman v. United States, 286 F. 852, 856

rC C A 8) 37

Wyatt V.' United States, 23 f'. (2d) 791, 792

(C C A. 3rd) 64

Statutes :

Section 338 of Title 18, U. S. C A 6

Section 88 of Title 18, U. S. C A 7

No. 8809

IN THE UNITED STATES

Circuit Court of Appeals

FOR THE NINTH CIRCUIT

JOE MAZUROSKY

Appellant

vs.

UNITED STATES OF AMERICA

Appellee

Upon Appeal from the United States District Court
for the District of Oregon

BRIEF OF APPELLANT

JURISDICTION

This is a criminal action in which the jurisdiction
of this Court and the District Court has been invoked
under the provisions of Sections 88 and 338 of Title
18, U. S. C. A., penal statutes of the United States.
The action was instituted by indictment of a Grand
Jury of the United States States District Court for
the District of Oregon.

STATEMENT OF THE CASE
THE INDICTMENT

The Indictment contains eight counts, the first six
of which were predicated upon Section 338 of Title 18,
U. S. C. A., and the last two upon Section 88 of the
same Title. A verdict of not guilty was returned by
direction of the Court upon all counts save those num-
bered 4, 7 and 8, and a verdict of guilty was returned
by the jury on said three counts, and Judgment was
entered thereon. (R. 41, 42, 43.)

Count IV

This is a substantive Count in which it is charged
that on or about the 28th day of September, 1935, the
defendant wilfully and feloniously placed and caused
to be placed in the United States Post Office at Kenne-
wick, Washington, and sent and delivered to the
addressee thereof by the postal establishment of the
United States, according to the address thereon, a letter
addressed to the Bank of California, at Portland, Ore-
gon, from the First National Bank, Kennewick, Wash-
ington, which said letter contained a bank draft drawn
to the favor of the Bank of California upon the First
National Bank of Portland, in the sum of $499.50. It is
alleged that the defendant in combination with one
Frank Faircloth and other named parties to an alleged
scheme to defraud, had procured, pursuant to said
scheme, a check in the sum of $500.00 from one H. F.

Belter and that the defendant, for the purpose of exe-
cuting said scheme and artifice to defraud, had caused
the mails to be used as above set forth.

The alleged scheme is incorporated in this Count of
the Indictment by reference to the allegations of Count
2 thereof in which it is alleged that the defendant and
his confederates would represent themselves as quali-
fied to treat various diseases of the eye and in doing
so would perform fraudulent operations on the eye of
the particular party for which substantial charges
were made.

Count VII

This is a conspiracy Count in which it is alleged
that the defendant conspired with one Roy L. Martin,
and others, on or prior to September 12, 1934, to violate
Section 338 of Title 18, U. S. C. A., in the use of the
United States mails to defraud. The fraudulent scheme
is alleged by reference to Count I of the Indictment,
in which it is set forth that the defendant and his con-
federates would represent themselvs as qualified to
treat various diseases of the eye and in doing so would
prescribe "Radium Water" and "Radium Belts," all
of which were fraudulent, and that substantial charges
would be made therefor. It is further alleged that it was
the intention of the defendant and his co-conspirators
that the U. S. mails should be used to effect the objects
of said conspiracy. Five overt acts are set forth which

embrace two alleged fraudulent transactions under said
conspiracy, to-wit, those which may be styled for con-
venience of reference, the "Mershon" transaction, and
the "Allen" transaction, respectively.

Count VIII

This is a second conspiracy Count under the same
Section of the Statute noted for Count 7. The conspi-
racy is alleged to have been formed on or prior to Sep-
tember 12, 1934. The alleged scheme is the same as that
noted in Count 4 of the Indictment, and the violations
set forth in Counts Numbered 2, 3, 4, 5 and 6 are incor-
porated by reference as embraced within the conspi-
racy and said acts are styled in this Count as overt acts.
Four additional overt acts are alleged which include,
with those incorporated by reference to Counts Nmn-
bered 3, 4, 5 and 6, two alleged transactions which may
be conveniently described as the "Belter" and "Dei-
bert" transactions. It is alleged that it was the inten-
tion of the defendant and his alleged co-conspirators
to use the United States mails in effectuating the con-
spiracy.

The defendant entered a plea of not guilty to each
count of the indictment. (R. 36) The case was tried
before the Honorable James Alger Fee, District Judge,
and a jury, resulting in a verdict of guilty on Counts
Numbered 4, 7 and 8 (R. 40). Judgment was entered on
the verdict and sentence was imposed on March 19,

1938 (R. 43). Notice of Appeal was served and filed on
March 24, 1938. (R. 3) The Bill of Exceptions was duly
signed, settled and certified on April 23, 1938, within
proper extension of time granted for that purpose.
(R. 180-43-44) The assignments of error were filed on
April 20, 1938. (R. 197)

The evidence introduced at the trial is summarized
herein under the title ''Summary of Evidence." At the
close of the evidence the defendant made a motion for a
directed verdict on the ground that ther was no sub-
stantial vidence sufficient to warrant a verdict of
guilty as to any of the Coimts of the indictment. This
motion was over-ruled as to Counts 4, 7 and 8, and
exception was taken thereto. (R. 153) Objections were
interposed to some of the testimony offered by the
United States, and received over objection, and excep-
tions were taken to the adverse rulings thereon. (R. 53,
56, 57) (R. 82, 138) (R. 68, 69, 70) (R. 72-73) (R. 89
to 95 inclusive).

The foregoing rulings present the questions raised
on this appeal.

QUESTIONS PRESENTED

1. Whether there was any substantial evidence suf-
ficient to warrant submission to the jury of Counts
Numbered 4, 7 and 8 of the indictment.

2. Whether error was committed in admitting cer-
tain testimony in behalf of the United States.

SPECIFICATION OF ASSIGNED ERRORS

The assigned errors relied upon by the defendant
are those numbered I (R. 181, 182) ; II (R. 183, 184;
III (R. 185, '86) ; IV (R. '86, 187, 188) ; V (R. 189,
190) ; VI (R. 190 to 195 inclusive) ; all of which are
set out in full hereinafter.

PERTINENT STATUTES

The defendant is charged in Count 4 of the indict-
ment with violation of Sec. 338, Title 18, U. S. C. A.,
and the particular sub-division thereof which reads as
follows :

''Whoever, having devised or intending to devise
any scheme or artifice to defraud . . . shall, for the
purpose of executing such scheme or artifice or at-
tempting so to do, place or cause to be placed, any let-
ter, postal card, package, writing, circular, pamphlet,
or advertisement, whether addressed to any person ,
within or without the United States, in any post office,
or station thereof, or street or other letter box of the
United States, or authorized depository for mail mnt-
ter, to be sent or delivered by the post office establish-
ment of the United States . . . or shall knotvingly cause
to be delivered by mail according to the direction there-
on, or ait the place at which it is directed to be deliv-
ered by the person to whom it is addressed, any such,
letter, post card, package, writing, circular, pamphlet,
or advertisement, shall be fined not more than $1,000
or imprisonment not more than five years, or both.

The defendant is charged in Counts 7 and 8 of the
indictment with violation of Sec. 88 of Title 18, U. S.
C. A., which provides as follows :

**If two or more persons conspire ... to commit any
offense against the United States . . . and one or more
of such parties do any act to effect the object of the
conspiracy, each of the parties to such conspiracy shall
be fined not more than $10,000, or imprisonment not
more than two years, or both. ' '

SUMMARY OF THE EVIDENCE

Preliminary Statement:

This summary of the evidence does not purport to
be a summary of all the evidence. Five of the eight
eomits of the indictment were withdrawn from the jury
at the close of the case, and it would not assist the court
to detail the evidence relating strictly to these coimts.

The evidence, for purposes of analysis, may be di-
vided into four distinct classifications: (1) Evidence
relating to the Wagner transaction consummated in
1925, and which embraces about one-third of the entire
record. (2) Evidence of perpetration of the fraudulent
scheme upon divers individuals by members of
the separate conspiracies, as alleged in Counts 7 and 8.
(3) Technical proof supplied by employees of the
banks. (4) Evidence of certain statements made by the
defendant and his relations with the two groups of con-
spirators; evidence of two checks received by the de-
fendant from each of the two groups of conspirators.

8

totaling four in all, which said checks were shown to
have been obtained pursuant to the execution of the
fraudulent scheme.

(1) The evidence relating to the Wagner transac-
tion is detailed with particularity, in an attempt to pre-
sent a chronological and narrative statement thereof.
This has necessitated skipping about from the testi-
mony of one witness to another, to the end that the nu-
merous links in this chain of evidence may be connected
together to form an intelligible sequence. Without re-
sort to such a method, any attempted summary of this
line of proof would only add confusion to an already
confused record.

(2) The testimony of the various witnesses who tes-
tified to the perpetration of the eye frauds upon them,
has been practically eliminated from the summary of
the testimony. It is not disputed that the actual con-
spirators did perpetrate the frauds upon the poor old
people who testified in this behalf. It is not disputed,
on the other hand, that the defendant had no connec-
tion whatsoever with the perpetration of these frauds.
The only claim made by the Government is that the
Defendant aided in furtherance of the fraudulent
scheme by cashing, or attempting to cash certain checks
obtained in execution of the fraudulent schemes. A
summary of this line of proof would only add a rhyth-
mic monotony to the review of the evidence without
lending any assistance to the Court upon the questions
jjresented.

(3) A substantial portion of the testimony relates
to the technical proof supplied by employees of the
irarious banks which handled the checks mentioned in
;he first six counts of the indicement, i. e., the Mershon
jheck (Count 1), the Belter check (Counts 2, 3 and 4),
md the Deibert checks (Counts 5 and 6). As already
tioted, the only portions of this testimony with which
we are now concerned is that pertaining to the specific
iharge alleged in Count 4 of the indictment. The evi-
ience in respect to this particular phase of the proof
Ls summarized beginning at p. 23 of this brief.

(4) The evidence relating to certain statements
rnade by the defendant, his relation with the two groups
3f conspirators and his method in cashing or attempt-
ing to cash the two checks obtained, respectively, in
3xecution of each of the fraudulent schemes is set forth
with particularity. It is upon this phase of the testi-
oiony that the essential contention in the case will be
uade by the government — on the subject of intent and
m the question of whether the defendant was a party
|to the said fraudulent enterprises.

IMPORTANT EVIDENCE

Frank Nelson, alias Frank Faircloth, but commonly
mown as ** Slats" Nelson, testified that he first met the
iefendant through a mutual acquaintance, Dr. Brown,
shortly after the World War. Dr. Brown had an op-
ical store adjoining the place of business of the defen-

10

dant at that time. The three visited together and were
friendly (R. 50). This was in 1918 or 1919 (R. 61).
After leaving the Army, Nelson entered the hotel busi-
ness in Spokane and continued in that line of work for
about four years, until ''about 1925" (R. 61). While
in Spokane, and apparently while operating the hotel,
Nelson studied optometry for two years, and began
practicing optometry in Spokane the latter part of
1924. He became a registered optometrist (R. 62). In
1925 Nelson discontinued the hotel business and the
practice of optometry and began his criminal career in
the "eye business," of which much will be seen as the
theme progresses (R. 61). During the year 1925, and
prior to November of that year. Nelson associated him-
self with the Dr. Brown previously mentioned, in the
carrying on of the eye frauds (R. 57-138) . On or about
Nov. 18, 1925, Nelson and Brown acting together in
their fraudulent scheme, performed a fraudulent oper-
ation upon the eye of a Mr. William Wagner, near Van-
couver, Washington (R. 56-57-68-69-72-73). For the
operation two checks were given, one for $500.00 and
one for $175.00, both drawn on banks at Vancouver,
Washington (R. 57). Dr. Brown cashed the $175.00
check at a Vancouver bank and received the money )
therefor (R. 57). Nelson attempted to cash the $500.00
check at a Vancouver bank, but the bank refused to
cash the check due to a supposed irregularity of the
endorsement. The bank did, however, certify the check
to its full amount "good when properly endorsed" (R.

11

84). The check was endorsed in blank and was freely
negotiable (R. 57-186). Nelson turned the check over
to Dr. Brown and did not see the check again until
1936 (R. 57). A few days later the check came back to
the bank, bearing a second endorsement, "O. A. Plum-
mer," the alias name under which Nelson was operat-
ing at that time (R. 69-158). The record does not show
who sent the check in for collection (R. 84). In the
interim Mr. Wagner had informed Mr. Dubois of the
bank of the circumstances under which the check was
given, and when the check came through for collection,
it was stamped "payment stopped" and returned to
the forwarding bank (R. 84). Mr. Stapleton, now Cir-
cuit Judge of Multnomah County, Oregon, and at that
time an attorney practicing in Portland, then took the
check personally to the Vancouver bank and demanded
payment. Mr. Dubois of the bank understood that
Judge Stapleton was representing the defendant in
making the demand (R. 84-85). It does not appear whe-
ther the banker informed Judge Stapleton of the cir-
cumstances attending the Wagner transaction (R. 85).
However, ' ' after these men departed with the checks, ' '
Mr. Wagner came to Portland in an effort to locate the
"eye doctors" and talked with Mr. Mazurosky, his en-
dorsement having appeared at some juncture upon the
$500.00 certified check (R. 70-186). In that conversa-
tion, Mr. Wagner told the defendant of the circum-
stances under which the check was given (R. 83). Then
a few days after Mr. Dubois of the bank had talked

12

with Judge Stapleton about the check, the Judge
brought the same to Vancouver and personally and
voluntarily surrendered the check to the bank without
payment. The check was never paid (R. 84-85). Nelson
testified that subsequently the defendant was reim-
bursed for having cashed the $500.00 certified check ;
that "there was a thousand dollars given to Mazu-
rosky"; and that when he "casually" asked the defen-
dant in 1931 if it really cost a thousand dollars to
' ' square ' ' that check, the defendant replied, ' ' Well, you
still owe me money." That was the only conversation
Nelson ever had with the dfendant about the check
(R. 52-53), and that was six years after the transaction
occurred (R. 56), and the only time Nelson had seen
the defendant between the time of the Wagner trans-
action in 1925, and the time he came back to this part
of the country (Portland) in 1931 (R. 52-56).

After Nelson and Brown departed with the checks
(Nov., 1925), Henry Wagner started on their trail
(R. 70). He first came to Portland to interview the
defendant, and did interview him one time alone (R.
70), and a second time in company with a police offi-
cer, the witness Goltz (R. 73-74). On each occasion, the
defendant gave Mr. Wagner and the officer a full ac-
count of the transaction in which he obtained the check ;
stated that the parties had bought $106.00 worth of
merchandise and that he had given them the balance
of the $500.00 certified check in cash; that he had

13

known one of the men for a number of years ; that he
didn't know where they were, but thought they were
around Portland; that Plummer (Nelson) was a gam-
bler and that he "made" the logging camps (R. 74).
The defendant gave accurate descriptions of both men
to the police and to Mr. Wagner (R. 70-74-75-69).

To develop the defendant's knowledge of the Wag-
ner transaction, the following questions and answers
were propounded to and given by the Witness Nelson :

''Mr. Dillard: Q. did you ever discuss this plan or
means that you have described here of obtaining these
checks from the Belters and the Wagners with Joe
Mazurosky, or discuss it in his presence'?

"A. 1 don't really think we ever did discuss it.

"I do not remember of having any conversation
with him in that regard.

"Mr. Dillard : Q. I will ask you if either you or this
man Brown that you refer to ever discussed this system
of obtaining money from people which you have de-
scribed you used in the Wagner instance. Did you ever
discuss it in the presence of the defendant '^

"A. No, sir, I don't think that I ever discussed it
witht Mazurosky or with Brown before any of us to-
gether." (R. 58).

The foregoing completes the record of the Wagner
transaction.

14

It is apparent from the record that when Nelson
and Dr. Brown combined their talents in the prosecu-
tion of the eye fraud in 1925, Brown closed his opto-
metry store, discontinued practice, and devoted his full
time to a career of fraud and criminal adventure with
Nelson. Nelson testified that at the time of the Wagner
transaction, he left "that part of the country" (R. 52)
and did not return until 1931 (R. 56). Nothing further
is heard of Dr. Brown except that he died and Nelson
buried him at Cincinnati, Ohio (R. 65). The date of
Brown's death does not appear in the record.

Nelson continued in the practice of the eye frauds
from 1925 until 1928 or 1929, at which time he entered
the hotel business at Seattle, Washington. He engaged
himself in this line of work for about a year (R. 62).
The record does not show whether during this interim
period between 1925 and 1928, he practiced the eye
frauds by himself or in combination with others (R.
62). After discontinuing the hotel business around
1929, Nelson re-entered the "eye business." He was
convicted "on this racket" in 1930 at Rockford, Illi-
nois (R. 62). He also served time in a penitentiary in
Wyoming on a felony charge, the time and period of
his incarceration not appearing in the record (R. 63).
Aside from these three interludes, i. e., the operation
of the hotel for a year around 1929, the Rockford, Illi-
nois, incident, and that which occurred in Wyoming,
he was engaged in perpetration of the eye frauds (R.

15

62). He would occasionally take time off to do some
gambling (R. 62).

After returning to the Northwest in 1931, Nelson
saw the defendant at various times. On a number of
occasions, he borrowed money from defendant, who in
connection with his store, operated a pawn shop (R.
62). These loans were never in excess of $50.00 at a
time (R. 60-64). In 1931, Nelson, the defendant and
other un-named parties took a pleasure trip some place
in Washington and stayed three lor four days (R.
60-61).

On or about September 20, 1935, Nelson performed
one of his fraudulent operations upon the eye
of one Belter (R. 136-54). For the operation, he
received $300.00 in cash and Mr. Belter's check for
$500.00. This check (Exhibit 4) was sent by Nelson
through the mail from Spokane, Wasliington, to the
defendant at Portland. It was endorsed in blank by
one Londergan, Nelson's partner, and did not bear Nel-
son's endorsement (R. 50-51). Nelson used his true
name of Frank Nelson in transmitting the check to the
defendant (R. 50-51). At the time the check was for-
warded. Nelson owed the defendant twenty or twenty-
five dollars (R. 51-64). The defendant cashed the check
and Nelson testified that the proceeds, $400.00, were
sent to him by the defendant about six weeks after the
date appearing on the check. Nelson gave him $50.00

16

for cashing the check, paid him $30.00 interest that he
owed him, and the remaining $20.00 deduction was for
money borrowed from the defendant (R. 51).

^*Mr. Dillard: Q. I will ask you, Mr. Nelson, if you
ever had a conversation with Joe Mazurosky, the de-
fendant, relative to the cashing of checks that might
be sent to him by you?

"A. Well, I really couldn't say that I did have any
understanding.

* ' Q. Did you ever talk with Joe Mazurosky, the de-
fendant, about a commission for cashing this check or
other checks of a similar character ?

*'. . . Objection. A. Well, there was only one time to
my knowledge; the defendant told me that ten (10%)
per cent wasn't enough; he would have to have more
money than that.

"Mr. Dillard: About when was that?

"A. That was in '35.

"Q. At that time did he say any more than that, that
ten (10%) per cent wasn't enough.

"... He just said that the checks were getting a
little hot and he would have to have more commission."
(R. 52)

On or about the 6th day of December, 1935, Nelson
and Londergan performed one of the fraudulent oper-
ations upon the eye of E. C. Deibert, at Rockford,
Washington. The check of Mr. Deibert in the siun of
$300.00 was given in payment for the operation and

17

the check was sent by Nelson to the defendant at Port-
land (R. 59). Nelson testified that he heard nothing
further about the check. Nelson was asked why he sent
the Belter check and the Deibert check (Exhibit 26)
to the defendant, and he testified: "Well, I knew that
the checks were to be handled through him" (R. 59).
Nelson, in these communications, used his true name
(R. 60).

"Mr. Dillard: I will ask you (Nelson) if you ever
had a conversation with Joe Mazurosky, we will say
between the years of 1929 and 1935, concerning the
means by which you made your livelihood, made your
living ?

"A. About the only thing that was ever said in re-
gard to the business was, he asked me, 'How are the
suckers. Slats? Are you making any big sales?' That
was the only conversation we had (R. 60).

"He asked me that several times between 1929 and
1935" (R. 60).

On or about the 20th of December, 1935, the defen-
dant was interviewed by two police officers, the wit-
nesses O. A. Powell and W. E, Williams, in reference
to the Deibert check. Exhibit 26. The defendant iden-
tified the party, J. C. Adams as Nelson ; told the offi-
cers he did not know his correct name, but that he was
commonly known as "Slats" and that he had worked
with Dr. Brown about 16 years ago in the eye specialist
bunk as far as he knew. The witness Powell couldn't

18

recall whether the defendant told him he received the
check personally or through the mail. The \vitness Wil-
liams testified that the defendant told him and Officer
Powell that Nelson had brought the check in to have
it cashed; that the defendant refused to cash it; he
said he would put it through the bank and he (the de-
fendant) didn't know whether it was any good until
the officers told him it had come back (R. 80). Nelson,
on the other hand, testified that he had sent the check
to the defendant from Spokane, Washington (R. 59).

Testimony relating to the conspiracy charged in count VII of
the indictment:

The witness John M. Gray testified that he was en-
gaged in the eye frauds, and that he first entered the
business in 1930. Prior to that time he had been a prac-
ticing optometrist for many years (R. 97). At the time
of the trial, he was an inmate of the Texas penitentiary
under sentence of 43 years for various crimes including
assault and attempt to murder, grand theft, and an eye
fraud charge in Norfolk, Virginia, to which he pleaded
guilty (R. 96). The witness operated in the eye frauds
between 1930 and 1935, and defrauded about 1,000 peo-
ple during that period (R. 97-98) . The witness first met
the defendant in November, 1935; was casually intro-
duced to him, and had no conversation with him (R.
86-93).

On or about October 29, 1934, Gray, in conjunction
with one T. A. Andrews, imposed the fraudulent eye

19

treatment on one Mrs. Mershon in the vicinity of Ar-
lington, Washington (R. 86). For this service, they re-
ceived the check of Mrs. Mershon in the sum of $450.00
(R. 134). Gray took the check to Seattle, Washington,
and delivered it to one Roy Martin, another confede-
rate in this particular scheme (R. 86). The witness
didn 't know personally what Martin did with the check,
but Martin told him that he mailed the check to the de-
fendant (R. 90), Martin also told Gray that it would
cost him (Gray) 15% to get the check cashed through
the defendant. Subsequently, by pre-arrangement with
Roy Martin, Gray went in company with Mrs. Roy
Martin to the store of the defendant in Portland, Ore-
gon, and received the proceeds from the Mershon check.
Gray testified that the 15% was deducted for cashing
the check (R. 86-87). The witness was not sure it was
the defendant who delivered the money, but from his
location outside the store of the defendant, the party
looked to be about Mr. Mazurosky's height. He would
not swear it was the defendant whom he saw in the
store (R. 88).

The witness Horack, Portland City Police, testified
that "around December 18, 1934" he had interviewed
the defendant at his store in Portland and talked with
him about the Mershon check. Exhibit 1. Mr. Mazu-
rosky identified his signature and stated that he had
cashed the check. The officer told the defendant that
the check had been obtained in a *' bunco game," and

20

the defendant told the officer he did not know how the
check was obtained; that he did not know the where-
abouts of the party ho gave him the check; that the
party was a doctor. The witness stated that the details
of the matter were hazy in his recollection ; that on the
previous trial he "might" have testified that he didn't
ask the defendant anything about who the parties were
from whom he (the defendant) obtained the check (R.
104-105).

The witness Eichenberger, Portland City Police,
testified that he interviewed the defendant in Decem-
ber, 1934, in company with officer Horack, concerning
the check, Exhibit 1 ; that the defendant told them that
he had cashed the check at the Bank of California ; that
the check had been given him for the purchase of some
goods ; that he had cashed the check and delivered the
balance of the money to the party (R. 106).

On or about September 13, 1934, Gray and his asso-
ciate, Andrews, perpetrated the eye fraud on one Allen
in the vicinity of Boulder, Colorado (R. 93). In pay-
ment for the operation, a cashier's check drawn upon
the Mercantile Bank and Trust Co. of Boulder, Colo-
rado, in the sum of $500.00 was given Gray.

After receiving the check. Gray gave the check to
Martin, who told him he could get the check cashed by
sending it to the defendant at Portland and that it
would cost 15% to have the check cashed. Martin told

21

Gray he was going to send the check to the defendant
and did mail it to the defendant from Denver, Colo-
rado. Later, Martin gave Gray $425.00, the proceeds
from the check (R. 94-95).

Gray testified that Martin and another associate,
Crangle, are at this time in the penitentiary at Atlanta,
Georgia ; that T. A. Andrews is an inmate of a Federal
penitentiary in Virginia (R. 92).

ARGUMENT

ASSIGNMENT OF ERROR No. I

"The Court erred in over-ruling defendant's motion
for a directed verdict as to Counts 4, 7 and 8 of the
indictment made at the conclusion of the case after all
parties had rested, for the reasons therein set forth:

Mr. Biggs : ''The Government having rested and the
defendant at this time resting, moves the Court for its
order directing a verdict of not guilty as to each of the
counts in the indictment, on the ground and for the
reason that there is no substantial evidence sufficient
to submit to the jury which establishes or tends to es-
tablish the connection of the defendant with any
scheme or artifice to defraud, or the particular scheme
or artifice to defraud described and set forth in each

22

count of the indictment, or the use of the mails pur-
suant to said scheme, there being no conscious partici-
pation of the defendant in such scheme. With respect
to the count of the indictment relating to the defen-
dant's alleged connection with Roy Martin, John Gray,
and others, for the further reason that there is no tes-
timony whatsoever connecting the defendant with any
criminal device, scheme, intent, or plan on their part,
all of the testimony admitted being the testimony of
acts or declarations of alleged co-conspirators, and
there is an inadeuate prima facie showing of a con-
spiracy.

*'The Court: Which cornit is that, now?

"Mr. Biggs : That is Count 1 of the indictment, Your
Honor, and also Count 7 of the indictment, being the
conspiracy count, and for the further ground that there
is no substantial evidence that the United States mails
were used by the defendant voluntarily or involmita-
rily or at all in comiection with this. ' '

Thereupon the following proceedings were had:

"The Court: The Court at this time denies the mo-
tion for a directed verdict as to Comits 1, 2, 3, 5 and 6.

"Mr. Biggs: And may we have an exception to the
Court's ruling as to Counts 4,7 and 8 of the indictment ?

"The Court: Yes" (R. 181-182).

This assignment raises the question whether there
was any substantial evidence sufficient to warrant sub-

23

mission to the jury of Counts numbered 4, 7 and 8.
Three distinct and severable lines of testimony were
offered by the government in support of each count,
respectively, and the argimient will be directed to each
comit in chronological sequence.

COUNT IV

INTENT AND KNOWLEDGE

Proof of intent and knowledge on the part of defen-
dant, as respects this count is closely identified with
the same question applying to Count 8. Discussion of
this element of the testimony will therefore be deferred
for treatment in the argument under the same sub-head
under said Count 8, beginning at p. 55 of this brief.

PERTINENT FACTS AND DISCUSSION

Attention is directed to the proof proffered by the
United States in support of Count 4 of the indictment.
The Court held that there was no sufficient evidence
of maiUng of the Belter check (Exhibit 4) by the Bank
of California (R. 160), but the record does show that
the defendant deposited the check with the Bank of
California, at Portland, Oregon, for collection and that
it was transmitted to the First National Bank of Ken-
newick, Kennewick, Washing-ton. Upon receiving the
item for collection, the Kennewdck Bank debited the
account of the drawer of the check, Mr. Belter, and
thereupon forwarded to the Bank of California at

24

Portland its own draft drawn upon the First National
Bank of Portland, to the favor of the Bank of Cali-
fornia, in payment of the check. Adequate proof was
offered to show that the draft was transmitted by the
use of the United States mails (R. 117). No evidence
whatsoever was offered to show the custom of the banks
in the payment by the collecting bank of items sent by
the forwarding bank for collection. There is not so much
as a suggestion in the record that it was the custom
and/or ordinary course of business for the collecting
bank to remit and pay by means of its own draft.

The subdivision of the statute, Sec. 338 of Title 18,
U. S. C. A., under which this count of the indictment
was drawn provides : ' ' Whoever shall knowingly cause
to be delivered by mail . . . any such letter, etc., for the
purpose of executing such scheme, shall be fined, etc.
It is assumed from the line of proof received in an
attempt to establish liability on this count of the indict-
ment that the Grovernment relied upon the rule enun-
ciated in the cases of Spear vs. U. S., (CCA 8th, 1917)
240 F. 250, cert, denied (1918), 246 IT. S. 667, 38 Sup.
Ct. 335, 62 L. Ed. 929; Savage vs. U. S., (CCA 8th,
1920) 270 Fed. 14, cert, denied (1921) 257 U. S. 642,
42 Sup. Ct. 52, 66 L. Ed. 412. The rule of these cases
is that liability may attach even when the actual mail-
ing has been done by a person entirely independent of
the defendant's control, this presumably upon a fic-
titious agency theory. A second theory found in the

25

cases as a basis for liabilitj^ under the statute, is found
in the rule that if the transmission of the item through
the mails was the natural and reasonable consequence
to be anticipated by the parties, this shall satisfy the
provision requiring that the party shall ''knowingly"
cause the item to be mailed. Shea vs. U. S., 251 Fed.
440; cert, denied 248 U. S. 581, 39 Sup. Ct., 132, 63 L.
Ed. 431.

It is of course true that when a party deposits a
check with a bank for collection upon an out-of-town
bank, he may reasonably anticipate that the check will
be forwarded through the mails in the process of mak-
ing the collection. Any one at all cognizant with bank-
ing practice knows that the original check must find
its way to the drawee bank. The bank becomes the de-
positor's agent in so forwarding the check. Spear vs.
U. S., supra. But the foregoing rule is without appli-
cation to the facts offered in support of Count 4 of the
indictment. The proof shows that the First National
Bank of Kennewick, the bank on which the check was
drawn, cashed the check, that is, debited the accoimt
of the drawer and charged itself with the amount of the
collection (R. 118). It thereafter forwarded its own
draft drawn to the favor of the Bank of California, in
payment of the collection item (R. 117).

We proceed now to an analysis of the facts and the
rules of law pertinent thereto to determine whether

26

the evidence in the case establishes liability under either
one of the theories of liability suggested in the cases
which have construed the statute, and to which refer-
ence is made, supra.

The First National Bank of Kennewick w^s not acting as the
agent of the defendant or of the Bank of California in trans-
mitting its draft to the Bank of California, in payment of the
check after collection thereof:

The relation between the forwarding bank (Bank
of California) and the collecting bank (First National
Bank of Kennewick) was that of principal and agent
until the agent had completed the business of collec-
tion. Upon debiting the account of the drawer of the
check, the First National Bank of Kennewick became
the debtor of the Bank of California, and the agency
relation ceased. One duty (the duty to collect) came to
an end, and another (the duty to remit) arose in its
place. Mr. Justice Cardoza in JeiDiings et ah vs. United
States Fidelity & Guarauty Co., 294 U. S. 216, 55 Sup.
Ct. Rep. 394, 79 L. Ed. 869 (1935). In the foregoing
case the learned justice cites numerous cases wliich
serve to dissipate any possible theory of agency per-
taining after the collection has been effected and the '
money received by the bank which has made the collec-
tion, i. e., the drawee or collecting bank. The collected
funds were "mingled" with the funds of the collecting
bank and the agency relation theretofore existing, gave
way to the normal debtor and creditor relation. The

27

legal and factual status of the defendant is thus clearly
distinguishable from that exhibited in the line of cases
above adverted to, which are usually cited as the lead-
ing cases on this particular phase of the problem.

It should be observed that under the cases where
liability has been imposed for sending or causing a
check to be sent through the mails by a bank, the facts
have invariably disclosed that the check was forwarded
for collection, thereby uniting the defendant in the case
as principal with the forwarding bank as agent. Where
the check is not placed with the bank for collection,
but, rather, is cashed by the bank and credit given, the
relation of principal and agent would not come into
being. The bank would thereby receive title to the check
and its act in forwarding the same through the mails
to the drawee bank would not in any sense be deemed
one directed to the execution of a fraudulent scheme.
Douglas vs. Fed. Res. Bank, 271 U. S. 489, 492, 46 Sup.
Ct. 554, 556, 70 L. Ed. 1051. Newland vs. First National
Bank of Kansis City, (CCA 8) 64 Fed. (2) 399, 402.
The relation between the depositor of the check and the
bank would simply be that of debtor and creditor and
the act of forwarding of the check would be an inde-
pendent banking transaction. Correlatively, when the
agency is cut off by the collecting bank's receipt of the
funds in payment of the check, its act in making pay-
ment to the forwarding bank by means of its own draft
is an independent banking trasaction between the col-

28

lecting bank as debtor and the forwarding bank as
creditor. Jennings et al vh. United States Fidelity dc
Guaranty Co., supra.

In concluding, attention is directed to the case of
Spillers vs. U. S., 47 Fed. (2) 893 (CCA 5). The testi-
mony showed that the defendant had sent five checks
to a Mrs. Oliver at Weatherf ord, Texas. Her daughter
received them and deposited them in the bank, which
bank in turn sent them to another bank in another city.
A witness testified that in the usual course of business
the checks would be sent by mail. Additional facts are
found in the decision of the court:

' ' It was not shown that the bank was the agent
of the appellant or had any dealings with him . . .

"No doubt the statute is to be broadly inter-
preted to effect the intent of Congress. The general
rule may be deduced from the reported cases that
whenever a person puts in motion a train of cir-
cumstances that ivill inevitably cause the mailing
of' a letter as a necessary step in a fraudiileni\
scheme, he may be found guilty of causing the let-
ter to be mailed on sufficient proof of knowledge
and intent. . . . However, it is not every incidental
use of the mail that occurs as a result of the scheme
that tvould constitute a violation of the law. The
letter must he knowingly mailed or he caused to he
mailed in furtherance of the scheme hy the defen-
dant.''

''On the undisputed facts in the record there
is nothing to shoiv that appellant knew, or had any
reason to know, or intended that any of the parties
to whom cheks trere sent would deposit them in

29

banks which would in turn mail them to Fort
Worth or Dallas for collection or that lie in any
way induced the deposits."

The foregoing case is cited at this stage of the argu-
ment on the proposition that the courts require the es-
tablishment of the relation of agency where a defendant
is sought to be charged for having caused banks to
handle checks received as the fruits of a fraudulent
scheme. The case is to be considered in conjunction with
the decisions already cited which impose hability where
the bank is made the agent by receiving a check for col-
lection. We proceed now to point out that there is noth-
ing in the record to show that appellant knew, or had
any reason to know, or intended that the Bank of Ken-
newick should send its draft through the mails, thereby
to render him liable on this count of the indictment

The transmission through the mail of the draft, Exhibit 11, was
not the natural and reasonable consequence to be anticipated
by the defendant in the collection of the check, Exhibit 4, and
the Defendant did not therefore "knowingly" or at all cause
the mails to be used.

We are confronted at the outset with the proposi-
tion, already mentioned, that there is a total absence
of any evidence shomng that it was the custom, prac-
tice and ordinary course of business for the First Na-
tional Bank of Kennewick or for any other bank to
remit collected items by its own draft. Moreover, there
is no evidence or suggestion in the record of knowledge

30

possessed by the defendant as to the customs and prac-
tices of banks in the handling of such items beyond the
fact the defendant did keep a bank account and did
avail himself of the ordinary banking facilities.

Conusel for the government and the court appar-
ently assumed that the same course of practice was in-
dulged by banks in the remitting of funds collected on
a forwarded item, as in the case of an original check
forwarded for collection. This is far from the fact and
the rule has long been settled, both in the state and the
Federal courts, that the two phases of the transaction,
i. e., the forwarding for collection and the remitting
of the funds collected rest upon different considera-
tions of fact and law.

A precise statement of the rule to which reference
is -made is found in the case of Federal Reserve Bank
of Richmond vs. M alloy et al., 264 U. S. 160, 44 Su]).
Ct. Rep. 296, 68 L. Ed. 617. Under the facts of that case,
a check was sent for collection to the bank upon which
the check was drawn. The collecting bank charged the
account of the drawer of the check and stamped the
check ''paid" and on the same day of receipt of the
item, transmitted its draft drawn upon another bank in
pajonent of the collection. The question was whether the
collecting bank had the right as a matter of law and
under prevailing custom and practice to remit by for-
wording its own draft rather than the actual money
called for by the terms of the check. The collecting

I

31

bank's draft was not honored, and the question of the
right of the collecting bank to remit by its own draft
was squarely presented. Further facts are noted in the
extracts from the opinion of Mr. Justice Sutherland.
The Court held :

" It is settled law that a collecting agent is with-
out authority to accept for the debt of his principal
anything but 'that which the law declares to be a
legal tender, or which is by common consent con-
sidered and treated as money, and passes as such
at par. ' Ward vs. Smith, 7 Wall. 447, 452 (19 L. Ed.
207). The rule applies to a bank receiving commer-
cial paper for collection.

" (Citing cases.) It is unnecessary to cite other
decisions, since they are all practically uniform.
Anderson vs. Gill, supra, presented a situation
practically the same as the one we are here dealing
with, and the Supreme Court of Maryland, in dis-
posing of it, said:

" 'Now, a check on a bank or banker is payable
in money, and in nothing else. Morse, Banks &
Banking (2nd Ed.) p. 268. The drawer, having
fmids to his credit with the drawee, has a right to
assume that the payee will, upon presentation, ex-
act in payment precisely what the check was given
for, and that he will not accept, in lieu thereof,
something for which it had not been drawn. It is
certainly not within his contemplation that the
payee should upon presentation, instead of requir-
ing the cash to be paid, accept at the drawer's risk,
a check of the drawee upon some other bank or
banker.' . . .

"Finally, it is urged that the acceptance of the
drawee's own draft, instead of money, was justi-
fied by custom. The testimony relied upon to estab-
lish the custom follows :

32

" 'The business of check collecting is handled
by the Federal Reserve Bank in a way very similar
to that in which it is handled by collecting banks
throughout the country. When one bank receives
checks on another in a distant city, it usually sends
them to the bank on which they are drawn or to
some other bank in that city, and receives settle-
ment by means of an exchange draft drawn by the
bank to which the cliecks are sent U|)on some one of
its correspondents. When checks are sent with the
expectation that the bank receiving them wall remit
at once, we call it sending for collection and return.
When this is done, the bank upon which the checks
are drawn is expected to cancel the cliecks and
charge them to the accounts of the drawers, and to
remit by means of its exchange draft or by a shi])-
ment of currency.'

"It thus appears that the custom, if otherwise
established, does not fix a definite and uniform
method of remittance. When checks are sent for
collection and return, the bank is expected to can-
cel the checks, and charge them to the account of
the drawers, and remit 'by means of its exchange
draft or by a shipment of currency,' the former
being used more frequently than the latter. Whe-
ther the choice of methods is at the election of the
drawee bank or the collecting bank does not ap-
pear. If it be the latter, it would seem to result that
the election to have remittance by draft instead of
currency, being wholly a matter of its discretion,
or even of its caprice, as to which the owners are
not consulted, would be at its peril, rather than at
the risk of the owners of the check.

''Btit the py^oof shows that the alleged eustom
was not knotvn to plaintiffs, and they eoidd not be
held to it tvithout sueh knowledge, because, all
other reasons aside, by its micertainty and lack of
uniformity, it furnishes no definite standard by
which the terms of the implied consent sought to be

33

established thereby can be determined. It furnishes
no rule by which it can be ascertained when an
exchange draft shall be remitted and when cur-
rency shall be required, or who is to exercise the
right of election. . . .

'M custom to do a tiling in either one or the
other of two modes, as the person relying upon ii\
may choose, can furnish no basis for an implication
that the person sought to he hound hy it had in
mind one mode rather than the other.

''It is said, however, that there is a custom
among banks to settle among themselves by means
of drafts, so well established and notorious that
judicial notice of it may be taken. But the usage
here invoked is not that, but is one of special appli-
cation to a case where the collection of a check is
intrusted to the very bank upon which the check
is drawn and where payment is accepted in a me-
dium which the contract, read in the light of the
law, forbids. The sjoecial situation with which we
are dealing is controlled by a definite rule of law
which it is sought to upset by a custom to the con-
trary effect ..." (Italics ours.)

The law of the State of Washington is to the same
effect. In First National Bank vs. Comm. Bank &
Trust Co., 242 Pac. 356, 358, 137 Wash. 355, it was held
that in the absence of custom or agreement, a collecting
bank is without authority to accept for the debt of its
principal anything but that which the law declares to
be legal tender.

34

The Supreme Court of Oregon held to the same ef-
fect in Loland vs. Nelson, 139 Ore. 581, 585, 8 Pac.
(2) 82:

''The acceptance by the Federal Reserve Bank,
Portland Branch, of a draft upon the Bank of Cal-
ifornia, instead of demanding and collecting the
money due on said check, ivas in no sense the act
of defendants Jenning, nor should theij he charge-
ahle therewith."

An interesting case on the same point is Fanners
Bamk and Trust Co. vs. Newland, 31 S. W. 38,39, 97
Ky. 464, wherein the Court held :

"Since the paying bank's draft may not under
the rule be accepted by a collecting bank, the only
course remaining is to send an agent to the point
of collection or to have the bank or agent at that
point send the actual rnoney by express or other
means of transportation."

Though there is no evidence in the record that it is
customary to forward money or currency by express,
and not through the mails, the Court is asked to take
judicial notice of that fact. The phrase "shipment of
currency" referred to in the Malloy case, supra, quite
obviously did not refer to a transfer of the money by
use of the mails. For other cases see Marshall vs. Wells,
73 Am. Dec. 381; Rainwater vs. Federal Reserve Bank
of St. Louis, 290 S. W. 69, 172 Ark. 631.

With the foregoing rules of decision in mind, it may
not be successfully contended that the forwarding of
the draft by the First National Bank of Kennewick

35

to the Bank of California, at Portland, was a reason-
able consequence to be anticipated by the Defendant,
upon his deposit of Exhibit 4 with the Bank of Cali-
fornia for collection. There is not a scintilla of evidence
in the record showing what the custom of the respective
hanks was in the remitting of funds collected on checks
forwarded to the drawee hank. No special contract or
even the basis for an implied understanding between
the banks defining the terms of the remittance is shown.
In the absence of a special agreement, or of custom of
universal application shown to have been known to the
defendant, he would naturally assume as this Court
would that the Kennewick bank would act within the
bounds of its legal authority and remit in the specific
medium called for by the terms of the check, to-wit:
Five Hundred Dollars, and not by means of its own
draft. Fed. Reserve Bank vs. M alloy, supra.

If counsel for the Government should have sought
to offer proof on the subject of the customs and prac-
tices of banks in remitting funds collected on checks
forwarded for collection by draft, grave difficulty
would be encountered in supplying the necessary proof.
The Federal Reserve System has a,s one of its essential
functions, a means of clearing checks without an inter-
change of communication by mail between correspond-
ing banks. The teletype, the radio, and the telegraph
companies all play steUar roles in the banking drama
as it is enacted daily in the banks of this country, both
large and small. The First National Bank of Kenne-

36

wick is not a ' ' distant ' ' bank witliin the perview of the
decisions. It is within the immediate trading area of
Portland, Oregon, in the Columbia Basin, and main-
tains its correspondent bank in Portland (R. 116).

In considering this phase of the question, the lan-
guage of Judge Chase, found in the case of United
States vs. Baker et ah, 50 Fed. (2) 122, (CCA 2), is
peculiarly appropriate :

"Since proof of the mailing of one of these let-
ters was the sine qua non of the crime charged, it
is necessary to look closely to this question upon
which so much depends to determine whether it
supplied the requisite proof. Of course, the neces-
sary proof may be furnished by circumstantial evi-
dence alone. Freeman et al. vs. United States,
supra, and cases cited. But the circumstances
proved must exclude all reasonable doubt.

The presumption, under the facts appearing in the record, is that
the defendant intended the remittance of the funds collected
on the Belter check. Exhibit 4, to be made without use of
the United States Mails.

The remittance of the funds collected upon the
check, Exhibit 4, might have been made in the reason-
able anticipation of the defendant, in a number of ways
without resort to use of the mails. The record is devoid
of any evidence showing the customs and practices of
the banks in the mode or formulae customarily adopted
by them in making such remittances. There is an ab-
sence of any evidence showing knowledge on the part

37

of the defendant of any such customs and/or practices,
if they do exist. Where it is shown that an act may be
performed in one of two ways, one of which involves
violation of a penal statute, and the other does not come
within the interdiction of the statute, the presimaption
is that the defendant intended the act to be performed
in an alternative manner which would not involve vio-
lation of the statute. Underhill on Criminal Evidence,
Ed. 1935, p. 52, contains expression of the rule in the
following language:

"Where there are two conclusions reasonably
possible, one compatible with innocence, and the
other with guilt, the presumption of innocence
must prevail."

The rule is aptly phrased in the case of WiUsma)i
vs. United States, 286 Fed. 852, 856 (CCC 8) :

"Evidence of the facts that are as consistent
with iimocence as with guilt is insufficient to sus-
tain a conviction. Unless there is substantial evi-
dence of facts which exclude every other hypothe-
sis but that of guilt, it is the duty of the trial court
to instruct the jury to return a verdict for the
accused ; and where all the substantial evidence is
as consistent with iimocence as with guilt, it is the
duty of the appellate court to reverse a judgment
of conviction." See cases cited in the decision, and
see also Terrij vs. United States, 7 Fed. (2) 28,
31 (CCC 9).

In Dalton vs. U. S., 154 Fed. 461 (CCA 7), the ac-
cused was a party to a fraudulent scheme in which he
and his confederates used the express and the telegraph

38

companies in its execution. Subsequently certain of the
conspirators began use of the U. S. Mails, but it was
not shown that the accused participated in the scheme
after the use of the mails was adopted as an aid in fur-
thering the scheme. Counsel for the Government sought
to invoke "an inference or presumption of continuance
arising from the facts and circumstances proven," but
the court rejected the argiunent, and held:

"Under the established rule of our criminal
law, however, as well defined in Coffin vs. United
States, 156 U. S. 432, 458, 15 Sup. Ct. 394, 39 L.
Ed. 481, the 'presumption of innocence is an in-
strument of proof created by the law in favor of
the accused,' and the presumption that the accused
would not remain in the concern tvhen it turned
i)ito a criminal course (criminal under the Federal
Statute) tvould set aside or overcome the assumed
inference of fact relied upon/'

The court in the above case also observed (pp. 462,
463):

"Moreover, while several witnesses state con-
versations with the plaintiff in error to arrange
for transmissions of the (so-called) literature by
express in 1903 and 1904, the record is without
proof ... of facts to charge the plaintiff in error
with purpose at such times to use the mails in exe-
cution of the scheme."

The case of Coffin vs. U. S., cited in the Dalton case,
supra, appears to be the leading case defining the full
limits of the application by Federal Courts of the pre-
sumption of innocence. The Court goes further than

39

to consider this rule as a presumption under the usual
definition of the term, but defines it rather as an ''in-
strument of evidence," operable at all times in a crim-
inal case in favor of the accused.

It is respectfully submitted that there is an absence
of any testimony in the record sufficient to warrant
consideration by the jury of Count 4 of the indictment.

I

COUNTS VII AND VIII

Both of the foregoing- counts are predicated upon
an identical theory and most of the legal propositions
applicable to one will apply with like effect to the other.
Since each count embraces a distinct and separate con-
spiracy, complete in itself under the theory of the pros-
ecution, the facts offered to support one conspiracy
comit will be without relevancy to sustain the other.
The testimony received in respect to Coiuit 7 is sum-
marized bginning at page 18 of this brief. The remain-
der of the testimony as summarized herein, was di-
rected to the proof Count VIII.

Among other things, the prosecution carried the
burden of proving (a) that a conspiracy existed as
charged in each coimt of the indictment; (b) that the
defendant was one of the conspirators, and (c) that it
was a part of the agreement comprising the conspiracy
that the U. S. Mails should be used in executing it.

40

INTENT TO USE THE MAILS

There is no substantial evidence to show that it was a part of
the agreement comprising the conspiracy that the United
States Mails should be used in executing it.

This point applies to both conspiracy counts. The
methods of approach of each group of conspirators
were similar in character. Without exception, and so
far as the record shows, in each of the thousands of
frauds perpetrated, the conspirators would x^ersonally
call upon the victim, would personally persuade the
victim, perform the fraudulent operation, and there-
upon personally receive the check or the cash in pay-
ment therefor. The witness Gray testified that between
1930 and 1935, he and his confederates imposed the
fraudulent scheme upon about one thousand people.
(E. 97-98) If Nelson was as active in his conspiracy,
as Gray was in his. Nelson and his group imposed the
fraud upon approximately two thousand peoj^le during
the entire period of his engagement in it. From the rec-
ord, it api3ears that only on two occasions did Nelson
use the mails in alleged furtherance of the scheme and
that was only after an attempt had been made in each
instance to personally cash each of the checks at the
banks or in the neighborhood where the respective
checks were received. Such was the invariable practice.
An identical course was pursued by Gray, and out of
the approximate number of 1000 frauds perpetrated by
his group, there were but two occasions in which the
mails were used as shown by the record.

41

It is significant that though Gray, heading one of
the conspiracies and Nelson, heading the other, both
testified apparently without reservation and freely dis-
cussed all the details relating to the respective conspi-
racies, and neither of them testified that it was a part
of the scheme that the mails, should be used. This is a
circumstance heretofore recognized by this court to be
of controlling importance. Kuhn vs. United States, 26
F. (2d) 463 (CCA 9).

With the foregoing facts in mind, attention is di-
rected to the case of Faryner vs. United States, 223 Fed.
903 (CCA 2), cert, denied 238 U. S. 638, 59 L. Ed. 1500,
35 S. C. 940. The facts upon which the ruling was based
may be substantially inferred from the language of the
court, as follows :

"Count 1 charged a conspiracy (section 37) to
commit a violation of that section (215) . Under the
first count, therefore, the government had to sus-
tain a heavier burden of proof as to the intent of
the conspirators than under the other two. Under
215 it is sufficient to show an intent on the part of
the deviser or devisers of the scheme to defraud
some one ; it is no longer necessary to show an in-
tent to use the mails to effect the scheme, as it was
under section 5480, U. S. Rev. Stat. The deviser of
the scheme may, at the time he planned it, have
intended to avoid all use of the mails in carrying
it out; nevertheless if, in carrying it out, he does
use the mails, the offense is committed. There are
two elements of the crime, a scheme intended to
defraud and an actual use of the mails; both, of
course, must be proved to warrant conviction.
When, however, the charge is conspiracy to commit

42

the offense specified in section 215, it is necessary
to prove an intent, not only to defraud, hut also to
defraud by the use of the mails. The draftsman of
the indictment fully appreciated this; the first
count charges an intent to use the mails as well as
an intent to defraud.

"Upon a careful examination of the record we
are satisfied that the government failed to prove
an intent by the conspirators named in the first
count to use the mails to effect the scheme. Direct
evidence of intent is rarely available; it may be
shown by circumstances. Usually when the scheme
is unfolded it is apparent that it could not be car-
ried out without using the mails, and a jury is
therefore warranted, without further proof, in
drawing the inference that those who devised the
scheme intended to use the mails. We do not find
in this record sufficient to warrant the inference
that on January 2, 1910, when the conspiracy was
formed, the conspirators intended to use the mails.
The scheme revealed is markedly different from
others which have been before the courts (mainly
under old section 5480), where it was evident that
the scheme could not be successfully carried out
without using the mails. Thus in the old 'green
goods game,' no personal interview could he risked
until, after an exchange of letters, it appeared that
some individual was a person who might be safely
trapped. When the scheme is to dispose of stock
at inflated prices, advertisements have to be ]mb-
lished calculated to hring inquiries hy mail from
many different places; in that only can a suffi-
ciently broad field be found for the dissemination
of the securities. But iv this scheme different tac-
tics are required. Advertising in the hope of bring-
ing response from persons eager to pay $10,000 or
$25,000 or $50,000 for a few books would be a waste
of money. The only practical method is to find out
hy inquiry the names of persons likely to be fooled,

43

and then to have theyn intervieived by one or more
cjlib talkers and thus persuade them to buy through
ingenious representations and the exhibition of let-
ters, telegrams, newspaper clippings, samples, etc.
When books in sets are bought, presiunably they
are sent by express, and the person who effected
the sale personally takes the check that pays for
tliem. Since inference is not enough to make out
full intent under Count 1, and there is no direct
evidence of it, ive think conviction under this count
shotdd be reversed."

In Schwartzberg vs. United States, 241 Fed. 348
(C. C. A. 2), the general nature of the charge contained
in the comit for conspiracy and the numerous counts
for the substantive offense was that one Bamberger
(a defendant) during several years represented him-
self to the persons and corporations to be defrauded
as a skillful salesman or a person able to procure busi-
ness, and having by such representations obtained some
business connection with said persons, he recommended
as good customers the other defendants. Thereupon
Bamberger's victims sold on credit to the other defen-
dants ; both they and Bamberger making, when it was
thought advantageous, false representations as to their
financial position and honest intent. For the goods sold,
payment was substantially never made. The court, in
holding that the evidence did not warrant conviction
on the conspiracy count, at page 353, said :

It is substantially admitted that an inspection
of the record does not justify the finding necessary
to sustain the conspiracy count, viz., that there was

44

an intent on the part of the conspirators to use the
mails in the execution of the scheme. Fanner vs.
U. S., 223 Fed. 903, 139 C. C. A. 341. While the mml
was used quite extensively, and in execution of the
fraud, the reliance of defendants, when some cer-
iainly conspired to defraud, was upon Bamberger's
quick tongue and fertility in falsehood. The intent
which we held necessary in the Farmer case was
naturally not proven by direct evidence, and could
not be inferred beyond a reasonable doubt.

^''The judgment on the conspiracy count is
reversed.''

A comparison of the facts of the Farmer case, supra,
with those offered by the Government in support of
each of the conspiracy counts, will reveal a striking
similarity, if not indeed, a substantial identity. The
Farmer case presents the settled law on this particular
phase of the question. It has been cited and approved
by this court. Siuhhs vs. United States, (C. C. A. 9)
249 Fed. 571.

Judge Morrow, speaking for this circuit in McKel-
vey vs. United' States, 241 Fed. 801, in sustaining the
sufficiency of an indictment emphasized that ''the use
of the mails and post office establishment formed a
part of, and was the essential fact of, the conspiracy
to commit an offense against the United States." See
also Morris vs. United States, 7 Fed. (2d) 785, (C. C.
A. 8) to the same effect.

Section 5480 of the Rev. St., which was in effect
prior to the adoption of the Penal Code, prohibited the

45

mailing of a letter in the execution or attempted exe-
cution of a scheme to defraud. This section required
that there must not only be a scheme to defraud, but
that the scheme must contemplate the use of the United
States post office establislmient. The present statute,
does not require that it be shown that there was an
intent to use the post office establishment. It is suffi-
cient if the said establishment is used. However, in
order to prove conspiracy to use the mails to defraud
it is necessary, as shown above, to establish that it was
an essential part of said conspiracy to use the mails to
defraud. Hence the decisions construing the effect of
the provisions of said section 5480 are applicable to
charges of conspiracy at the present time.

In Brooks vs. United States, 146 Fed. 223 (C. C. A.
8), Syll. 1, it was held:

"In order to make out the offense defined by
Rev. St., Sec. 5480 (U. S. Comp. St. 1901, p. 3696),
prohibiting the mailing of a letter in the execution
or attempted execution of a scheme to defraud,
there must not only be a scheme intended to de-
fraud, but such scheme must contemplate as one
of its essential parts the use of the United States
post office establishment to effect its purpose, the
gist of the offense being the mailing of the letter
in furtherance of sucli a scheme/'

46

Again in United States vh. McCrary, 175 Fed. 802,
Syll. 1, it was held :

"To constitute the offense of 'using- the mails lo
effectuate a scheme to defraud,' within Rev. St.,
Sec. 5480 (U. S. Comp. St. 1901, p. 3696), the
scheme must have been one which contemplated
the use of the post office establishment to effectu-
ate it, and it is not sufficient that the mails were
ust&d as a mere incide^it to some fraudulent
scheme/'

It is submitted upon the basis of the authorities
cited, that there is no substantial evidence to show that
it was a part of the plan and scheme of the conspiracies
set forth in Coimts numbered 7 and 8 of the indictment
that the United States mails should be used in the exe-
cution thereof.

PROOF OF DEFENDANTS PARTICIPATION AS

A MEMBER OF THE CONSPIRACIES

CHARGED

Pertinent Facts Relating to Count VII:

The facts relating to this count are summarized be-
ginning at page 18 of this brief.

It may be admitted at the outset that a conspiracy
existed between Gray, Martin et al., for the purposes
set forth in the indictment ; also that an overt act was
committed sufficient to support the charge. The failure

47

of proof is found in the absence of any substantial evi-
dence to show that the defendant was one of the con-
spirators.

The only one of the parties to this conspiracy who
testified was the witness, Gray. He did not testify that
the defendant was a party nor did he give any testi-
mony from which it might reasonably have been inferred
that the defendant was so associated. The witness Gray
did not meet the defendant until a week or ten days
after consummation of the last transaction mentioned
in the indictment. It was shown that Martin and the
defendant knew each other and that Martin knew the
defendant would cash checks sent to him upon a dis-
count basis of fifteen per cent; that Martin sent the
defendant two checks (Mershon and Allen) obtained
pursuant to the fraudulent scheme, and that the defen-
dant cashed these checks and retained 15 per cent of
the amount of each check for this service. In cashing
the checks the defendant endorsed them in his true
name and deposited them with his own bank. One of
these checks was a cashier's check (R. 135). The cir-
cumstances attending the cashing of the checks by the
defendant were regular. No inference adverse to the de-
fendant may b drawn from the fact that he discounted
the checks in cashing them. The court will take judicial
notice of customary business practices. The profit ob-
tained upon discount of commercial paper is a legiti-
mate profit and these transactions as shown by the

48

record were simply that. The defendant was in the busi-
ness of operating a loan-office and pawn shop. It was
to be expected that in the absence of knowledge of the
fraud, he would cash the checks and take a profit for
doing so.

The officer Horack testified that ''around Decem-
ber 18, 1934, ' ' he interviewed the defendant concerning
the Mershon check, Exhibit 1, and told the defendant
at that time that the check was received in a "bunco
game," and the defendant told the officer he did not
know how the check was obtained. After receiving the
information from the officer that the Mershon check
was received in a "bunco game," it does not api^ear
that the defendant handled any more checks for the
Martin-Gray gang of conspirators.

There is an absence of any testimony to show that
either Gray or Martin told the defendant about the
fraudulent scheme. There is nothing to show that Mar-
tin was not engaged at the same time in legitimate en-
terprises. There is not a syllable of testimony showing
or even indicating that the defendant knew or had any
basis for knowing that the particular checks (Mershon
and Allen) were obtained pursuant to execution of the
fraudulent scheme.

Counsel for the government will doubtless concede
that the evidence offered by the United States was
purely circumstantial. No witness testified that the

49

defendant was one of the group. Defendant's only con-
nection with either of the transactions set forth in this
count of the indictment was through Roy Martin who
told the witness Gray that the defendant would cash
the checks upon a discount basis of fifteen per cent.

In evaluating the evidential credence to be given
circumstantial evidence, resort must be had to certain
elemental rules of law to which reference will now be
made.

The evidence received in support of Count VII of the indict-
ment is consistent with the innocence of the accused, and
upon a record showing such to be the fact, the conviction
will be set aside.

The rule is established without exception in the
Federal courts that facts which merely give rise to a
reasonable and just inference of the guilt of the ac-
cused, are insufficient to warrant a conviction. To war-
rant a verdict of guilty, the evidence must be of such
character as to exclude every reasonable hypotheses but
that of guilt of the offense imputed to the defendant.
The facts must be consistent with his guilt only, and
inconsistent with his innocence. Terry vs. U. S., (C. C.
A. 9) 7 Fed. (2) 28, 31. Whenever a circumstance, re-
Jied upon as evidence of criminal guilt is susceptible
of two inferences, one of which is in favor of innocence,
\mch circumstanc is robbed of all probative value, even
[ikough, from the other inference, guilt may be fairly
'deductible. Turinetti vs. U. S., 2 Fed. (2) 15 (C. C. A.
:8); Vernon vs. U. S., 146 Fed. 121, 123 (8th).

50

Without proof that the defendant knew that the
checks were obtained pursuant to the fraudulent scheme
alleged in Count 7, and without proof that the defen-
dant knew that it was an essential part of the structure
of said conspiracy that the mails should be used, it is
difficult to determine a theory upon which the gove*rn-
ment can hope to suggest an hypothesis of guilt, to say
nothing of any number of hypotheses of innocence ap-
parent upon the face of the record. The presumption
is that the defendant did not know of the fraudulent
scheme, and that everything he did was in good faith.
Coffin vs. U. S., 156 U. S. 41^2, 458, 460, 15 Sup. Ct. 394,
39 L. Ed. 481.

If it should be stated that the practice of discomit-
ing checks, in itself contains basis for an inference of
guilt, the question is immediately presented, guilt of
what? The defendant was not indicted for any irregTi-
larity in the cashing of checks. He is charged simply
as a conspirator, and as a party to a fraudulent scheme.
Proof that the defendant was guilty of irregular con-
duct or of acts directed to some unlawful end is not
sufficient. The proof must establish that the acts of
the defendant were directed to the accomplishment of
the particular fraud alleged in Coimt 7 of the indict-
ment. Lonahmtgh vs. U. S., 179 Fed. 476 (C. C. A. 8).

Attention is now directed to a series of cases which,
it is submitted, correctly apply the rules to which ref-
erence has been made.

51

A leading case, and one frequently cited, is Stuhhs
vs. United States, (C. C. A. 9th) 249 Fed. 571. The rule
enunciated in that case is more precisely stated in the
cases about to be discussed. The assumption is that the
court will want to study the case in all its multiple
ramifications.

In Linde vs. U. S., 13 Fed. (2d) 59 (C. C. A. 8), one
Linde and Brown were indicted under the same penal
statute with which we are here concerned. The facts
pertinent to our inquiry are noted in the opinion from
which we quote :

''In this indictment Linde, Brown, and Winter
alone are named. It would appear that at the time
it was returned the full scope of the conspiracy
was not fully known ; but in the indictment others,
Avhose names were to the grand jurors unknown,
were alleged to be parties to this conspiracy. One
of the main assignments of error is that the evi-
dence as insufficient to connect these three defen-
dants with the conspiracy, and with knowledge
that the stolen cars involved were, or were to be,
transported in interstate commerce. With respect
to the defendants Linde and Brown we think the
point is well taken. A careful consideration of the
entire record convinces us that it fails to disclose
any further connection with the scheme, although
the existence of such a scheme and plan is abun-
dantly established, than the receipt of a car by
each of these defendants for personal use, and
without proof of knowledge of the interstate char-
acter of the transaction. There are a iiumher of cir-
ctmistances which would lead to the suspicion that
both Linde and Brown knew that the cars sold or

52

traded to them, were stolen cars, hut it does not
appear that they knew tvhence they came, or were
to come, nor that they were parties to any general
plan or conspiracy having as its object the intro- ,
duction of such cars from without the state for \
purposes of disposition and sale. TJiat they may
have had guilty knotvledge and participation rests
upon suspicion only, arising froyn their acquain
tance and association with some or all of the other
conspirators ; hut to estahlish a conspii^acy to vio-
late a criminal statute the evidence must convince
that the defendants did something other than par-
ticipate in the suhstantive offense tvhich is the oh-
ject of the conspiracy. There must, in addition
thereto, he proof of the u)dav'fid agreement, and
in this case, in our judgment, that proof is insuffi-
cient. United States vs. Heitler et ah, (D. C.) 274
F. 401; Stuhhs vs. United States, (C. C. A. Ninth
Circuit) 249 F. 571, 161 C. C. A. 497; Bell vs.
United States, (C. C. A. Eighth Circuit) 2 F.
(2d) 543.

'*As to these two defendants, it is therefore un-
necessary to consider the other errors assigned."

In Dickerson vs. U. S., 18 Fed. (2d) 887 (C. C. A. 8)
certain defendants were charged on conspiracy counts
under Section 88, Title 18, U. S. C. A., for violation of
the National Prohibition Act. The court gave rejDeated
emphasis to the fact that from the record it did not
appear that any of the alleged conspirators had in-
formed the defendants in error of the terms of the con-
spiracy. In other respects the said defendants were
closely identified with certain of the admitted conspi-
rators in actual dealings with them in the business of
the conspiracy while the conspiracy was in process. The

I

53

facts are detailed beginning at page 85 of the Appendix
of this brief. The court held :

^^ Wherever a circumstance relied on as evi-
dence of criminal guilt is susceptible of two infer-
ences, one of tvhich is in favor of innocence, such
circumstance is robbed of all probative value, even
thougli from tlie other inference guilt may be fair-
ly deducible. To warrant a conviction for conspi-
racy to violate a criminal statute, the evidence must
disclose something further than participating in
the offense which is the object of the conspiracy;
there nmst be j^roof of the unlawful agreement,
either express or implied, and participation with
knowledge of the agreement. Linde vs. U. S., 13 F.
(2) 59 (C. C. A. 8th Cir.) ; U. S. vs. Heitler et al.,
(D. C.) 274 F. 401; Stubbs vs. U. S., (C. C. A. 9th
Cir). 249 F. 571, 161 C. C. A. 497; Bell vs. U. S.,
(C. C. A. 8th Cir.) 2 F. (2d) 543; Allen vs. U. S.,
(C. C. A.) 4 F. (2d) 688; U. S. vs. Cole, (D. C.)
153 F. 801, 804; Lucadamo vs. U. S., (C. C. A.)
280 F. 653, 657. . . . The gist of the offense is the
conspiracy, which is not to be confused with the
acts done to effect the object of the conspiracy.
Ipoyimatsu Ukichi vs. U. S.', (C. C. A.) 281 F. 525."

This Court in Kuhn vs. United States, 26 Fed. (2d)
463 (C. C. A. 9) made application of the same doctrine
in its opinion by Judge Dietrich, in which the learned
judge observed:

' ' Upon a re-examination of the record, we have
concluded that we were in error in holding the evi-
dence sufficient to warrant a finding beyond rea-
sonable doubt that the defendant Moon partici-
pated in the enterprise, with knowledge of its un-
lawful character. The most material circumstance

54

against him is that he was on or about the Talbot
the night the arms were taken on board. But they
were in boxes or cases, and he may very well have
been ignorant of the contents, or of their destina-
tion. We think, too, we failed to attach due signifi-
cance to the fact that Borreson, tvho freeli) gave
evidence for the goverymient, at no time testified
that there was any coyyimiini cation to Moon touch-
ing the real object of the voyage."

To arrive at a conclusion of guilt upon the facts
here appearing, circumstances would have to be pre-
sumed which are without support in the record. Facts
warranting conjecture or suspicion are not sufficient,
as we have endeavored to show. Evidence warranting
a suspicion or an hypothesis of guilt is not substantial
evidence. A presumption of fact arrived at by piling
inference upon inference, and presumption upon pre-
sumption will not be recognized in either civil or crim-
inal cases. Interesting cases in which the Federal courts
have exposed the vice in reasoning of this sort, are :

United States vs. Ross, 92 U. S. 281, 284; 23 L.
Ed. 707; Brady vs. United States, 24 Fed.
(2d) 399 (C. C. A. 8) ; Gargotta vs. United
States, 24 Fed. (2d) 399, and cases cited.

It is respectfully submitted that there is an absence
of any substantial evidence sufficient to warrant con-
viction upon Coimt 7 of the indictment.

55

COUNT VIII

There is no substantial evidence in the record sufficient to sus-
tain the conviction on Count 8 of the indictment.

The facts relative to Count 8 correlate pretty well
in general outline with those offered in support of
Count 7. The question of knowing participation by the
defedant in the fraudulent scheme as alleged in Count
4 of the indictment, looks for solution to the evidence
received in support of Counts 4 and 8 as a unit.

We have heretofore discussed the quesion of the
sufficiency of the evidence to establish the requisite
intent to use the mails as an essential ingredient of the
conspiracy. So likwise, what has been said with refer-
ence to the rules of law pertinent to an evaluation of
the evidence received in support of Count 7, is equally
pertinent to a consideration of this count.

We proceed now to a brief analysis of the testimony
upon which it will be contended in this Court, as it was
contended at the trial, that the defendant with full
knowledge participated in the fraudulent scheme. This
evidence falls into two groups, to wit : (1) That relating
to the Wagner transaction consummated in 1925, and
(2) certain statements made by the defendant to the
witness Nelson and to police officers. The Wagner
transaction will be discussed in some detail under as-
signments of error numbered 2, 3, 4 and 5, and refer-
ence is made thereto beginning at page 59 of this brief.

56

Reference is made to the colloquy between the wit-
ness Nelson and the defendant, appearing at pp. 51, 52
of the record. Thereat the witness testified that ''with
relation to the cashing of checks" that might be sent
by Nelson to the defendant that there was only one
time when the matter was discussed between them and
that was in 1935. At that time the defendant told Nelson
that "10% wasn't enough," that "the checks were get-
ting a little hot and he would have to have more com-
mission." The record does not show whether this con-
versation was held prior or subsequent to the transac-
tions alleged in the indictment and testified to by the
witnesses.

The fact that the defendant cashed some checks for
Nelson, and that he discounted the checks for doing so,
is not evidence of participation by the defendant in the
fraudulent scheme alleged in the indictment. Nelson
was part of the time a gambler, part of the time a hotel
operator, part of the time an eye racqueteer. There is
no suggestion in this evidence that the checks to which
reference was made in the colloquy, were received by
Nelson pursuant to the particular fraudulent scheme
alleged in the indictment.

The statement by the defendant that "the checks are
getting a little hot" only carries the inference that for
some reason not shown by the record, the checks were
to be questioned. The checks might have been thought
by the defendant to be "hot" for any one of a thousand

57

reasons. The defendant knew Nelson to be a gambler,
and lacking in quilities which go to the making of good
citizenship.

It should be observed that after testifying to the
above, and at pp. 57 and 58 of the record. Nelson testi-
fied that at no time did he ever discuss the fraudulent
scheme with the defendant; "I don't remember having
any discussion with him in that regard; I don't think
we ever did discuss it."

So far as the record shows, the defendant's only
contact with the alleged conspirators was through Nel-
son. If Nelson didn't tell him, who did? The police
didn't tell him; the postal inspectors didn't tell him.
It is unfair of the prosecuting officers to expect the de-
fendant to exercise psychic powers and read the minds
of the conspirators. It would require a whole series of
inferences, one to be built upon the other, to arrive
at a conclusion that because the defendant thought the
checks were getting ''a little hot" they had obtained
; that status from being procured in the particular
fraudulent scheme alleged in the indictment. See cases
cited supra, page 54 of this brief.

The witness Nelson testified at page 60 of the record

! that the "only conversation" he ever had with the de-

i fendant concerning the means by wliich Nelson made

' his livelihood, was on several occasions between 1929

and 1935, at which the defendant queried: "How are

58

the suckers, Slats'? Are you making any big sales'?"
Again we inquire, what suckers ? Nelson didn 't answer
his queries. He maintained on these occasions as he had
on all others when he talked with the defendant, a sto-
ical silence regarding the fraudulent scheme. He was
not telling the defendant or anyone else about his
fraudulent scheme. It was but natural that he should
deceive the defendant and obscure his fraud from him,
as he would from the police. Had not the defendant at
all times cooperated with the police in the making of
their investigations; given accurate descriptions of
Nelson and of Dr. Brown ; told them in 1935 that "about
16 years ago ' ' Nelson had been engaged with Dr. Brown
in the eye frauds; that Nelson was a gambler — all of
which was true, and all of which would serve as inval-
uable clues directed to the apprehension of Nelson.

It is clear from the record that the defendant didn 't
trust Nelson. On the two occasions when the checks
were brought to him, he refused to cash them, but did
consent to send them through for collection. That he
thought the checks might not be good, does not warrant
an inference that the defendant knew the particular
checks were obtained in the particular fraudulent
scheme alleged in the indictment. Lonahaugli vs. U. S.,
supra.

Upon a fair construction of the evidence, all entirely
circumstantial, it is submitted that the record not only
bristles with hypotheses connoting the innocence of the

59

accused, but affirmatively shows that the defendant
was not aware of the fraudulent scheme alleged. At the
very most, this evidence cannot rise above bare sus-
picion and loose conjecture.

In concluding this phase of the argument, attention
is directed to the propositions and authorities pre-
sented in respect to Count 7 which are applicable here
and which have been simply referred to to avoid
duplication.

f "

ASSIGNMENTS OF ERROR NUMBERED
II, III, IV AND V

These four assignments all relate to the reception
in the evidence of testimony of various witnesses, and
an exhibit (No. 7) all concerning an alleged fraudulent
transaction perpetrated in 1925 upon one Wagner. Due
to their length, they are set forth in full in the appen-
dix, beginning at page 71. Objections were made on the
ground that the transaction occurred thirteen years
prior to the date of the alleged conspiracy, and evidence
in respect thereto was therefore too remote; that the
transaction was not st forth in the indictment; that
there is an absence of any testimony connecting the ac-
cused with said fraudulent transaction. Exceptions
were taken to the ruling of the court.

The four errors assigned rest upon common ground.
All were admitted, it appears, upon a single theory
governing their admissibility.

60

The testimony and the Exhibit No. 7 noted in said assignments
were inadmissible because they were too remote to have
evidential value, and because the transaction to which they
relate was not connected with the offenses charged in Counts
4 and 8 of the indictment.

The basis for the general rule rendering evidence
of other and similar offenses inadmissible is well stated
by Mr. Justice Peckham as follows:

"To adopt as broad a ground for the purpose of
letting in evidence of the commission of another
crime is, I think, a very dangerous tendency. It
tends necessarily and directly to load the prisoner
down with separate and distinct charges of past
crime whicli it cannot be supposed he is or ^vill be
in proper condition to meet o rexplain and which
necessarily tend to very gravely i)rejudice him in
the minds of the .iury uxjon the question of his guilt
or innocence. "

The quotation is obtained from the case of State vs.
Wilson, 11?) Ore. 450, 233 Pac. 259.

The rule is stated in some of the cases, however, that
where fraudulent intent is one of the material allega-
tions in the indictment, evidence of other and similar
ventures by the accused at or about the same time, is
properly admissible on the question of intent. The rule
as thus enunciated has been applied in cases involving
use of the United States mails to defraud. Samuels vs.
U. S., (C. C. A. 8), 232 Fed. 536; Biddell vs. [\ S., 244
Fed. 695, 700 (C. C. A. 9) ; Shea vs. U. S., (C. C. A. 6)
251 Fed. 440. In Paeker vs. U. S., (C. 0. A. 2) 106 Fed.
906, it was held that a similar business transaction con-

61

ducted by the accused within a year to those charged in
the indictment, was not too remote to be proved.

Much is left to the discretion of the trial judge.
Hendry vs. U. S., 233 Fed. 5, 13 (C. C. A. 6). But the
other offenses on which evidence is off erd must be so
nearly related in time and place as to have some ten-
dency to prove the commission of the crime charged.
Sutherland vs. U. S., 92 Fed. (2d) 305, 306 (C. C. A.
4). A conspiracy is not an omnibus charge under which
you can prove anji^hing and everything and convict of
the sins of a lifetime. Terry vs. U. S., 7 Fed. (2d) 28,
30 (C. C. A. 9). In Cooper vs. U. S., 9 Fed. (2d) 216
(C. C. A. 8), it was held that in a prosecution for con-
spiracy to defraud the government by filing false tax
returns, admission of testimony that nearly two years
prior to the conspiracy charged, one of the defendants
asked a witness to charge inventory by cutting it in
two, was error. Likewise, in Jay vs. U. S., 35 Fed. (2d)
553, 554 (C. C. A. 10), the court held:

"Counsel for the defendants contend that the
court erred in admitting over their objection, testi-
mony concerning the trunk transaction and the sale
to Blairs, on the ground that such transactions took
place i3rior to the formation of the alleged conspi-
racy and were independent and isolated transac-
tions which had no bearing on the crimes charged
in the indictment. We think this contention is well
taken. The proof did not establish a conspiracy
prior to March, 1927. The evidence was prejudicial
and the conviction upon the conspiracy comits
must be set aside. ' '

62

With the foregoing general statements of the rule
in mind, attention is directed to the testimony men-
tioned in the assignments and the summary of the evi-
dence beginning at page 7 of this brief.

The Wagner transaction occurred in 1925, thirteen
years prior to the return of. the indictment, and ten
years prior to the first subsequent incident, in which
the defendant cashed a check for the conspirator Nel-
son. This was the Belter check received on or about
September 20th, 1935. The Wagner check, which was
cashed by the defendant, was a cashier's check and it
was not discounted. The defendant employed an attor-
ney to attempt collection thereof. Immediately follow-
ing the incident. Nelson left ''this part of the coiuitry"
and did not return until 1931, and he had not seen the
defendant in the interim period. The record does not
show a course of dealing and a continuous series of
transactions which might render the testimony admis-
sible under the rule of tliis circuit annomiced in Ketlcr-
back vs. U. S., 202 F. 377. There is an absence of
the necessary connecting proof. Schaffer vs. Common-
wealth, 72 Pa. St. 60, cited in State vs. Wilson, 113
Ore. 450, 464, is in point :

"To make one criminal act evidence of another,
a connection between them must linve existed in the
mind of the actor, linking them together for some
purpose he intended to accomplish; or it must be
necessary to identify the person of the actor by a
connection which shows that he who committed'

I

63

the one must have done the other. Without this
obvious connection it is not only unjust to the pris-
oner to compel him to acquit himself of two of-
fenses instead of one, but it is detrimental to jus-
tice to burden a trial with multiple issues that tend
to confuse and mislead the jury."

The testimony and the exhibit included in the assignments were
inadmissible because the same evidenced a different conspi-
racy from that charged in the mdictment.

The conspiracy existing in 1925, with Brown and
Nelson as the participants therein, was not the same
conspiracy charged in Count 8 of the indictment which
is alleged to have had as parties the defendant. Nelson,
Londergan, and other divers persons. Nelson left the
country presumably with Brown and subsequently
died. In 1929 Nelson was in the hotel business for about
a year ; at other times he was in the penitentiary. There
is an absence of any testimony showing the existence
of a conspiracy between 1925 and 1935. Nelson could
not conspire with himself. The conspiracies had sep-
arate identities, and the fact that Nelson was a partici-
pant in both and that they were both directed to a com-
mon end does not affect their status as such. Terry vs.
U, S., 7 Fed. (2d) 28, 30 (C. C. A. 9).

To be admissible in evidence, the acts of a co-con-
spirator must be done while the conspiracy is pending
and in furtherance of its object. Brown vs. U. S., 14
S. C. 27, 39, 150 U. S. 93, 98, 37 L. Ed. 1010; Lane vs.
U. S., 34 Fed. (2d) 413, 416 (C. C. A. 8). The acts of

64

a co-conspirator prior to the formation of the conspi-
racy are not admissible against his co-conspirators.
Mi7iner vs. U. S., 57 Fed. (2d) 506, 511 (C. C. A. 10) ;
Marcante vs. U S., 49 Fed. (2d) 156, 157 (C. C. A. 10).
In Wyatt vs. U. S., 23 Fed. (2d) 791, 792, it was said
that when, as here, one large conspiracy is specifically
charged, proof of different and disconnect d smaller
ones will not sustain conviction ; nor will proof of crime
committed by one or more of the defendants, wholly
apart from and without relation to others conspiring
to do the thing forbidden, sustain conviction. See also,
Terry vs. U. S., supra, to the same effect.

Ill

ASSIGNMENT OF ERROR No. VI

This assignment of error, which is set forth in the
appendix because of its length (beginning at p. 78),
relates to testimony given by the witness John M. Gray
concerning declarations made by a co-conspirator, Roy
L. Martin, out of the presence of the defendant. Objec-
tion was made upon the ground that there was no suf-
ficient or any prima facie showing of the defendant's
connection with the conspiracy charged in Count 7 of
the indictment, and on the further ground that no suf-
ficient foundation was laid for the introduction of any
statements or declarations made by the said Martin
out of the presence of the defendant. Exception was
saved to the rulings of the court.

65

Tt testimony noted under Assignment of Error No. 6 was inad-
missible because the declarations made by the co-conspirator,
Martin, were made out of the presence of the defendant and
were not made in furtherance of the objects of the conspiracy.

The full substance of the testimony upon this fea-
ti'e of the proof is set forth in the assignment of error
S'the objectionable declarations may be viewed in re-
lif against the background of the evidence.

I The portions particularly objectionable are as fol-
l(ys :

"Q. What did Martin tell you as to what he had
d 16 with the Mershon check ?

A. My conversation with Roy Martin was that he
ndled the check to Joe Mazurosky.

"Q. And did he tell you anything about the arrange-
nnt with Joe Mazurosky ? What did he tell you ?
n "A. It would cost me fifteen per cent to get the
cack cashed through Joe Mazurosky. (Referring to
tti Allen check.) He told me he could send it to Port-
lud for collection and it would cost me fifteen (15% )
pr cent."

The first two of the declarations were obviously not
i] furtherance of the objects of the conspiracy. The
c.ck had already been sent by Martin to the defendant
p| or to the time the statements were made by Martin.
Mrtin was given complete control over the check. The
dilarations were simply narrative of a past event.
Sch declarations are not competent and are highly

66

prejudicial. Mayola vs. United States, 71 Fed. (2d) 65
(C. C. A. Ninth) ; Garrecht, C. J.)

The declarations noted under this Assignment of Error were in-
competent because the declarations of one co-conspirator to
another are not competent to establish the connection of a
third person with the conspiracy.

It will be recalled from the record that Roy L. Mar-
tin was the only one of the alleged conspirators who
was known to and by the defendant. Of the parties mak-
ing up this conspiracy, to-wit : Crangle, Gray, Andrews,
and Martin, the defendant knew only Martin so far as
the record shows. It was Martin who knew that the
defendant would cash the two checks and it was Martin
who sent the checks to the defendant. The witness and
co-conspirator. Gray, was not acquainted with the de-
fendant and he so testified. There is not a syllabic of
evidnce suggesting that the defendant had any contact
whatsoever with the other alleged conspirators.

Upon this state of the record it will readily appear
that the declarations of Martin as testified to by the
witness Gray, afforded the only link by which it was
sought to connect the defendant with participation in
the conspiracy.

The rule is established in this circuit beyond per-
missible controversy that the declarations of one con-
spirator to another are not competent to estabhsh tlie
comiection of a third person with the conspiracy.

67

Mayola vs. U. S., supra; Ktihn vs. U. S., 26 Fed. (2cl)
463 (C. C. A. Ninth).

The testimony noted under this assignment of error was inad-
missible because there is an absence in the record of any
independent evidence showing that the conspiracy existed
and that the accused was a party to it at the time the decla-
rations were made.

Reference is made to the summary of the evidence
relating to Count 7 of the indictment, beginning at page
18 of this brief. Without the declarations of the co-con-
spirator, Martin, there is an absence of any evidence
showing the defendant's alleged connection mth the
said conspiracy or with any of the members thereof.
For that reason, the declarations of Martin, being the
ones particularly set forth above, and the others noted
in the assignment, were objectionable and prejudicial.
Mayola vs. U. S., supra ; KuJin vs. U. S., supra.

' The declarations were peculiarly vicious and preju-
dicial under the state of this record because their ad-
mission served to qualify the receipt in evidence of the
Allen and Mershon checks. The evidence showed that
the defendant cashed the two checks obtained in each
of the conspiracies. Since defendant's only participa-

• tion, under any theory of the case, is found in the cash-
ing of these checks, the receipt in evidence of the Mer-
vshon and Allen checks served to double the quantum
of evidence on this material feature of the case.

68

Under the rule of Kuhn Case, supra, the jury
should have been instructed to disregard all testimony
received in support of Count 7, for the reasons hereto-
fore assigned. That the receipt of this volume of testi-
mony cast a blight upon the whole case, there can be
no doubt. It was loaded mth prejudice and this court
so held, by analogy, in the Mayola Case, supra.

The legal presumption is that error produces preju-
dice. It is only when the fact so clearly appears as to be
beyond doubt that an error did not prejudice and could
not have prejudiced the complaining party that the rule
that error without prejudice is no ground for reversal
can have effect. Deery vs. Ci^ay, 5 Wall. 795, 807, 808,
18 L. Ed. 653; Peck vs. H enrich, 167 U. S. 624, 629, 17
Sup. Ct. 927, 42 L. Ed. 302; Todd vs. United States,
221 Fed 205, 208 (8th) ; Crawford vs. United States,
212 U. S. 183, 203, 53 L. Ed. 465, 29 S. C. 260.

CONCLUSION

The record is made up in large measure of the testi-
mony of old people who had been defrauded by the two
groups of conspirators. The case, by reason of this fact,
was heavily freighted with emotional substance. Juries
in such a circumstance require a scape-goat and not
infrequently convict the innocent. See Pro. Borchard's
work : ' ' Convicting the Innocent, ' ' Yale University
Press 1932. The explanation is found in the fallible

69

quality of circumstantial evidence as an instnunent of
proof.

It is respectfully submitted that the judgment
should be reversed on the several counts of the indict-
ment.

Respectfully submitted,

EDWIN D. HICKS,
HICKS & ADAMS,
Attorneys for Appellant.

70

INDEX TO APPENDIX

Assignment of Error No. 2 71

Assignment of Error No. 3 73

Assignment of Error No. 4 75

Assignment of Error No. 5 77

Assignment of Error No. 6 78

Dickerson v. United States, 18 F. (2) 887 ,

Digest of Pertinent Facts 85 '

71
APPENDIX

ASSIGNMENT OF ERROR No. 2

That the Court errer in permitting the witness for
the United States of America, Mr. Frank Nelson, to
testify as follows:
Questions by Mr. Dillard: [1391

"Q. How did Mr. Wagner happen to give you a
cheek for Five hundred ($500.00) Dollars?

"A. I called on Mr. Wagner at his home

"Mr. Biggs: Just a moment, the defendant objects
to the introduction of any testimony concerning the
manner or means or time or place of the taking of that
check. It is now shown to be set up in the indictment.
It is not the basis for one of the charges made in the
indictment ; it is dated, as already identified, some thir-
teen years prior to the indictment and some nine years
! prior to the date the alleged conspiracy commenced, and
therefore is too remote to be admitted under the theory
of any similar transactions, if that is what is claimed
for it.

"Mr. Dillard: It is offered, Your Honor, to show
knowledge on the defendant. It will develop that — well,
it is offered to show knowledge.

1 "The Court : The Court will admit the testimony in
|/iew of the matters that have been already testified
•regarding Government's Exhibit 7.

"Mr. Biggs: May we have an exception to the
[Court's ruling?

72

'*The Court: Yes.

** Frank Nelson : T came into possession of the Wag-
ner check, Exhibit 7, under the following circum-
stances: I called on Mr. Plummer at his home, intro-
duced myself as a local optometrist from Vancouver,
Washington, examined his eyes and told him that he
had a trouble that I really didn't understand myself,
that he should consult an eye, ear, nose and throat spe-
cialist, and I asked him if he knew anybody in Van-
couver or Portland that he was personally acquainted
with that he cared to go see, and he said that he didn't ;
so I told him about a party that was with me that was
an eye specialist and that if he would go out and ask
him to come in that he might give what information
he needed, so he did that. 1 told him my partner (Dr.
Brown) was Dr. Ainsworth. He called Brown into the
house and Brown [140] performed an operation for
him on his eye. At that time we were using the skin of
an egg. He put that on the eye and removed it from
the eye, and showed it to him and charged him Six
Hundred Seventy-five ($675.00) Dollars, I think it
was. We got two checks, one for One Hundred Seventy-
five ($175.00) Dollars, and one for Five Hundred
($500.00) Dollars. The one for $175.00, Dr. Brown
cashed at one of the banks in Vancouver, Washington.
I took the other Wagner check to another bank and
he refused to cash it, but the banker certified the check.
I am referring now to Exhibit 7 for identification.
When he refused to cash the check, I gave it to my

73

partner, Dr. Brown, and from that day until last year

\ I never saw the check any more. Dr. Brown was a

friend of Mr. Mazurosky as well as myself. He was the

gentleman who had the store next door to Mazurosky 's

; store, the optical store."

ASSIGNMENT OF ERROR No. 3

I That the Court erred in permitting reception into
the evidence of Exhibit numbered 7, offered and re-
ceived in behalf of the United States of America under
th following circumstances:
Questions by Mr. Dillard:

Mr. Dillard : If Your Honor please, we will offer in
evidence Government's Exhibits for identification 4,
5, 7 and 2G.

Mr. Biggs: If the Court please, the defendant ob-

ijects to the introduction of these checks on the gromid

land for the reason that there has been no evidence suf-

•ficient to connect the defendant with the manner and

method and means by which these checks were taken

'or for any other purpose, and I assume they would be

immaterial if they were not offered for the purpose of

'connecting the defendant with that transaction; as to

.Exhibit 7, on the further ground and for the further

j reason that it is in connection with a transaction occur-

'ring more than thirteen years prior to the date of the

ioffer, and upon that ground it is too remote to have

probative force.

i

74

The Court: All these checks have the defendant's
signature and they are admissible in evidence. Admit-
ted. Exception allowed.

(The documents heretofore marked Government 's
Exhibits 4, 5, 7 and 26, respectively, for identifica-
tion were thereupon received in evidence.)
There was thereupon received in evidence. Exhibit of
the United States of America, numbered 7, which is
in words and figures as follows, to-wit :

GOVERNMENT EXHIBIT 7

98-37
Vancouver, Wash., Nov. 14, 1935
Washington Exchange Bank

Payment stopped.
Pay to the

Order of O. A. Plummer $500.00

Five Hundred 00/100 Dollars

Exactly Five Hundred Dollars Exactly Exactly
HENRY WAGNER
Good for $500.00

When properly endorsed
Lloyd DuBois
P. M.
Nov. 18, 1925
(Endorsed on Back) O. A. Plummer O. A. Plummer

Henry Wagner C-15297

O. A. Plummer
Joe Mazurosky Cancelled
786 Kearney St.
Be 5581 [142]

75

ASSIGNMENT OF EREOR No. 4

That the Court erred in permitting the witness for
the United States of America, Mr. Henry Wagner, to
estify as follows:
Questions by Mr. Strayer :

Q. Mr. Wagner, will you just tell the jury the cir-
•umstances under which you made out and delivered
hat check?

Mr. Biggs: If the Court please, we object to the
ntroduction of this testimony on the ground that it was

0 do with a transaction in the absence and not in the
•resence of this defendant, there being no sufficient
oundation made connecting the defendant with the
ransaction or showing knowledge of the transaction.

The Court: The objection is overruled.

Mr. Biggs: And may we have an exception?

The Court: Exception allowed.

Mr. Biggs : Could a continuing objection to this tes-
mony go on, Your Honor, to prevent the necessity of
mstant interruption?

The Court : You will have to object to the testimony
:' each witness.

Mr. Biggs: But it may be a continuing objection?

The Court : As far as the testimony of the particular

1 tness.

Mr. Biggs : Thank you.

There were two men came to my farm on the 14th
c y of November, 1925, who said they were eye doctors

76

that tried to sell us glasses. I wasn't in need of any
glasses, but my brother, William, did need them; his
eyes were failing and they examined his eyes and dis-
covered that there was something wrong and finally
found it was a cataract — told him it was a cataract, and
said that it would have to be removed or else he would
go blind, and so he submitted to the operation to remove
the imperfection in his eye. Before they did that I
asked them what it would cost to remove it and they
said it would be nominal, the price would be nominal,
and so they went to work and removed it and when they
got through the bill was Seven Hundred Fifty ($750)
Dollars.

They had an instrument about a foot long, a sort of
rod, and they worked around in his eye with that and
removed something that looked like the white of an egg,
and they called that the cataract. That was the opera-
tion that was performed. [148] These parties were
using the names of Dr. O. A. Plimuner and Dr. J. C.
Ainsworth. Mr. Plummer was a tall, slim man, rather
dark, about 35 or 40 I should judge. I believe I saw
him today. The other wasn't near as tall, was older,
heavy set with a sloping forehead at a conspicuous
angle. The older man performed the operation. When
they said they wanted $750.00 I objected. They said
radium was used to remove the cataract and that the
value of the radium used in the operation was Six
hundred fifty ($650.00) Dollars. They reduced the bill
to Six hundred fifty ($650.00) Dollars and I wrote out

77

two checks, this one and another for One hundred sev-
enty-five ($175.00) Dollars. The checks were handed
over to Mr. Plmnmer. I did not see them after I deliv-
ered the checks. One of the checks was cased, the
$175.00 one. I next saw the $500.00 check at Mr. Du-
bois' in the bank." [144]

ASSIGNMENT OF ERROR No. 5

That the Court erred in permittong the witness for
the United States of America, Mr. William Wagner,
to testify as follows :

Questions by Mr. Strayer:

My name is William Wagner, brother of Henry
Wagner, and we live near Vancouver, Washington. I
recognize the check you have handed me, Exhibit 7 for
identification.

Q. Do you recall the circumstances under which
that check was made out and delivered?

A. Yes, sir.

Q. Will you just tell the jury about it ?

Mr. Biggs: If the Court please, for the purpose of
the record we object to the introduction of this testi-
nony on the grounds assigned with respect to the testi-
nony of the brother.

The Court: The objection is overruled.

Mr. Biggs : And that will go to aU the testimony on
he further ground of remoteness?

The Court: Overruled. Exception allowed.

78

Mr. Strayer: Q. Tell us the circumstances under
which your brother made out and delivered that check.

Well, this check was written for eye doctors. There
were a couple of them, Plummer and Ains worth, and
they examined our eyes and told me I had a cataract
on one of my eyes and if it wasn't removed I would go
blind in a short time. It scared me, of course, and it
scared my brother, and we issued this check in payment
for the operation. The check was made out by my
brother in my presence. The check was delivered to
Plummer. The check was nver paid. I have seen neither
of the men since then. The operation didn't help me
''one bit." [145]

ASSIGNMENT OF ERROR No. 6

That the Court erred in permitting the witness for
the United States of America, Mr. John M. Gray, to
testify as follows :

Questions by Mr. Strayer:

Q. What did Martin tell you as to what he had done
with the Mershon check?

Mr. Biggs: If the Court please, we object to the
witness answering that question on the ground that it
would be hearsay, there being no sufficient or any
prima facie showing of any partnership in crime or
otherwise between Mr. Martin and Mr. Mazurosky, and
therefore no sufficient foimdation laid for the intro-

79

duction of any statements, declarations, or evidence of
any acts of omission or commission done in the absence
and out of the presence of the defendant.

The Court: The objection is overruled.

Mr. Biggs : And may we have an exception ?

The Court: Yes.

A. My conversation with Roy Martin was that he
mailed the check to Joe Mazurosky.

Mr. Strayer : Q. And did he tell you anything about
the arrangement with Joe Mazurosky*?

Mr. Biggs: If the Court please, may we make the
same objection and have the continuing objection to
any testimony asked for and given by this witness in
connection with statements or evidence of facts or dec-
larations on the part of Martin ?

The Court: Yes.

Mr. Biggs: I make the same objection at this time.
Your Honor.

The Court: The objection is overruled.

Mr. Biggs: And may I have an exception?

The Court: An exception is allowed.

Mr. Strayer : Q. What did he tell you ?

A. It would cost me fifteen per cent (15%) to get
the check cashed through Joe Mazurosky.
I As I previously stated, my arrangement with Mrs.
Martin was that she would go down with me to Joe
Mazurosky 's and we would obtain this money and I
would take my part of the money and Mrs. Martin was
to keep his part of the money. [146]

80

Q. And under your agreement wdth Martin what
percentage of the check were you to receive?

A. I received a total of sixty (60%) per cent.

Q. And what was to be done mith the balance of the
money ?

A. Fifteen (15%) per cent would go to Joe Maz-
urosky for collection, twenty-five (25%) yer cent to
Martin and Cragie, and sitxy (60% ) per cent to Nelson
and myself.

We were paying Martin and Crangle twenty-five
(25%) per cent for advance information concerning
these people.

Referring to the time when I received the Mershon
check on October 29th, after having a conversation
probably one or two days previous to that with Mr.
Martin and Mr. Crangle, they told me circumstances
of a fake cataract operation on Mrs. Mershon, or Mr.
Mershon, one or the other of them. I went to the home
of these i)eoi3le on this date and made an examination
of the party that was supposed to be operated on, I
don't recall which one now. I remember explaining
that I was there for the purpose of giving them back
the money in the event that it wasn't cured, that the
doctor that operated on them had had an accident of
some kind and probably was killed ; anyhow, after my
examination I told them it wouldn't be cured without
the use of a radium belt and explained to them a I'adium
belt was very valuable, only twelve of them in the
United States ; the doctor that made them had died with

81

the secret. The windup of the conversation was that
they deposited this amount of money with me as surety,
one of these belts to be delivered to their home and used
for a period of thirty days, and that is how I obtained
the check.

To my knowledge there was no such thing as a ra-
dium belt. There was nothing more the matter with
these people than senility or old age. At the time I
talked with them I was using the name, Dr. Pierce. I
also went by the names of Miles, Hamilton, Howard,
Clayton, Cox and others. I understood that the name
T. A. Andrews was the correct name of the party who
was with me. He also went by the name of Thomas,
Judge Thomas, and I so introduced him to the Mer-
shons. I represented Thomas as an attorney, settling
the estate of the doctor ho had been killed and who had
performed the operation on their eyes. Thomas is at
this time in a Federal Penitentiary in Virginia. I un-
derstand Roy Martin and Herbert Crangle are in the
Federal Penitentiary at Atlanta, Georgia. Crangle usu-
ally went by the name of Dr. Avery. Martin, when per-
forming the operations, usually was represented as
Dr. Miles.

I Referring back to the time when I received the pro-
jceeds of the Mershon check, I will state that I met Mr.
Mazurosky about a week thereafter, for the first time.
I was introduced to him by Roy Martin at the St. An-
drews Apartment Hotel in Portland, Oregon.

82

Q. And what were you doing there at the St. An-
drews Apartment Hotel?

A. Mr. Martin was living there at the hotel. I was
down there to see him and I just met Mr. Mazurosky,
that is all.

The Allen check, Exhibit 3 for identification, which
you have handed me was received by me sometime in
September, 1934. I went to the home of Clara Allen
and her brother somewhere around Boulder, Colorado.
The exhibit is a cashier's check.

Mr. Stray er : Q. And how did you receive possession
of it?

A. T. A. Andrews and I drove to the home of Clara
Allen and her brother, out of Boulder, Colorado, and
I talked to Miss Allen and her brother and performed
a so-called fake cataract operation on the brother's eye
and went to town to get this money. She drove her car
and we followed in another car. She didn't have the
money in the bank. They had some Liberty bonds and
these were at the bank in the name of the brother and
she couldn't obtain these bonds, so she had to go back
home and get an order for them, and it was then too
late to get the bonds out of the bank that day so I in-
structed her to go the following day and get the bonds
or the cash money and I would be back in a few days
to get it, but I didn't. I waited a couple of weeks and
I sent Mr. Andrews out there early on Sunday morn-
ing. That day he returned with the check and gave it

83

to nie. I received the check from T. A. Andrews about
twelve or fifteen days after the date noted on the check.
I was working with Andrews at that time.

I performed the operation on Miss Allen's brother.
Dne to senility, his vision was dim and I explained to
him that I could make him see with radium treatment.
I dropped a few drops of Murine eye water into his
eye and removed a piece of skin that I had — I was sup-
posed to have removed it — and that was all there was
to it. He did have a cataract but I did nothing about it.
The check was given me in payment for the operation.
I was using either the name of Miles or Pierce, I am
not sure which. Andrews was using the name of
Thomas. Miss Allen's brother received no benefit from
the operation. After receiving the check, I gave it to
Roy Martin. He told me he could send it to Portland
for collection and it would cost me fifteen (15%) per
cent. He told me he was going to send it to Joe Mazu-
rosky. He wrote him a letter and put it in an envelope
and dropped it in a mail box in Denver, Colorado. After
he mailed the letter, I later received the proceeds of the
check. Mr. Martin gave me Five Hundred ($500) Dol-
lars less fifteen (15%) per cent, which is Seventy-five
'($75) Dollars, in Seattle — a few dollars less than that
because he told me that the money had been wired to
I him. That was about the first or second week in Octo-
ber, 1934. I went back to see Miss Allen in 1935. When
I was there the first time they had two thousand dol-
lars in Liberty bonds and I went back there to get the

84

balance of them if I could. I talked to Miss Allen;
found her in the cow pen milking a cow. It was early
in the morning. I went in and talked to her and she
didn't recognize me. As soo as I began to talk about
eyes she told me she had been swindled out of Five Hun-
drd ($500) Dollars and if I would go down town and
talk to the district attorney he would tell me all about
it, and so that was all I wanted to know and I drove
away. She did not recognize me as one of the men who
had been there before. I wore no disguise.

(The check, Government's Exhibit 15 for Iden-
tification, was thereupon marked.)
The first time I ever saw the exhibit marked Govern-
ment 's Exhibit 15 for identification was at the trial in
Portland. I can't say that I recognize the handwriting.
When 'Martin sent the checks to Joe Mazurosky, he
used the name of R. E. Terrell.

85
DIGEST OF PERTINENT FACTS

Bicker son vs. United States, 18 Fed. (2d) 887 :

''After a careful consideration of the record, we
are satisfied that the evidence upon which the gov-
ernment must depend to connect the plaintiffs in
error with the conspiracy is that they hougJit some
of the liquor, and that at the time the alcohol was
being taken away from the Red Line Transfer &
Storage Company building at Des Moines on the
20th of March, 1923, it tvas said hy CJiapnian (who
had been employed by the original consjoirators,
after the alcohol had arrived from Peoria at Des
Moines and had been removed from the car and
stored in the Red Line Transfer Company's build-
ing to sell it) in the presence of the plaintiffs in
error, that the alcolwl had come from Peoria, and
the further testimony that each of the drimis bore
the legend: '(Jomplete denatured alcohol, proof
188. Kentucky Distilleries ch Warehouse Company
D. P. 141st Dist. III. Formula 5 I. C. C. 10.'

The claim made by the government, and stated
in their brief, that the plaintiffs in error were pres-
ent when the car of alcohol came in from Peoria
and was unloaded, is not borne out by the evidence.
While Kelso, the witness, at first stated, he after-
wards changed his testimony and said he was mis-
taken about that. The most that can he said of this
testimony is that it conveyed knowledge to the
plaintiffs in error that the alcohol had been ship-
ped from Peoria: to Des Moines.

The testimony of Kelso on this point is very
weak, but, assuming it to be true, we do not think
it is sufficient to charge the plaintiffs in error with
knowledge of the conspiracy. The record shotvs
very clearly that the plaintiffs in error had never

86

taken any part in the general conspiracy or scheme
and never knew of its existence, never participated
in the profits or took any jyart in it in any maimer,
unless this can be inferred from the mere fact that
at the time that the alcohol urns delivered to them,
some days after they had paid for it, they acquired
the knowledge that the alcohol Imcl been shipped
from Peoria. Tliere is, of course, the further fact
that they purchased a large quantity of the alcohol
from one or more of the conspirators. The evidence
introduced by the government shoivs clearly that
neither Hunnell nor CJiap^nian, nor any of those
who had to do with selling the liquor to the plain-
tiffs in error, gave them any information what-
ever concerning the conspiracy, or even as to where
the liquor had come from.

This is the sum total of all the evidence upon
which the government must depend to connect the
plaintiffs in error tvith the conspiracy. The other
evidence in the record touching this point is af-
firmative evidence introduced by the government
to the effect that none of the conspirators who
dealt with the plaintiffs in error informed tlieni
of the conspiracy or anythi)ig about it. . . .

It will further be observed that Chapman was
not in on the deal at all until after Hunnell and
Sehaller had been unable to dispose of the product,
and it is Chapman whom the witness Kelso testi-
fied made the remark at the Red Line Transfer &
Storage Company on the 20th of March, 1928, that
the car had come from Peoria, ^l.s- to the plaintiff
in error, Eaton, the record is without dispute tJiat
he teas not only not informed by any of the conspi-
rators, but that he himself made inquiry of Berg
if there ivas alcohol in the tvareliouse for sale, and
Berg then called Sehaller, and got Schaller's con-
sent to sell two drums of alcohol to Eaton."

No. 8809

Ctrmtt OInurt of Ap^t^ab

Jnrtlff 5Ji«tIj(Etrrait

JOE JMAZUROSKY,

Appellant,

vs.

UNITED STATES OF AMERICA,

Appellee.

BRIEF OF APPELLEE

Upon Appeal from the United States District Court
for the District of Oregon.

CARL C. DONAUGH,

United States Attorney for
the District of Oregon,
J. MASON DILLARD,
M. B. STRAYER,

Assistant United States Attorneys
for the District of Oregon,
506 U. S. Court House, Portland, Ore.,
Attorneys for Appellee.

EDWIN D. HICKS,
HICKS & ADAMS,
515 Pacific Building, Portland, Ore.
Attorneys for Appellant.

STEVENS-NESS LAW PUB. CO.. PORTLAND 79893

INDEX Page

AKGUMENT 10

CONCLUSION 25

POINTS AND AUTHOKITIES 9

STATEMENT OF FACTS 1

TABLE OF CITATIONS :

Alexander vs. United States, 95 Fed. (2d)
873 9

Chew vs. United States, 9 Fed. (2d) 348. ... 9
Corbett vs. United States, 89 Fed. (2d) 124. . 10

Farmer vs. United States, 223 Fed. 903 9

Hartzell vs. United States, 72 Fed. (2d) 569

9, 10

Hnme vs. United States, 118 Fed. 689 9

Johnson vs. United States, 22 Fed. (2d) 1.10, 23

Ketterbach vs. United States, 202 Fed. 377 . 10, 23

Levey et al vs. United States, 92 Fed. (2d)
688 9, 17

Mitchell vs. United States, 229 Fed. 357. .. . 10

Schwartzberg vs. United States, 241 Fed. 348 9
Silkworth vs. United States, 10 Fed. (2d)

711 9,16

Silkworth vs. United States, 10 Fed. (2d)

719 20

Smith vs. United States, 267 Fed. 665 . 10, 21, 25

Tincher vs. United States, 11 Fed. (2d) 18.9, 18

United States vs. Kenofskey, 43 U. S. 440. .9, 19

Williams vs. United States, 2(^5 Fed. .. 625

10,24,25

AVilliamson vs. United States, 207 U. S. 425.- 10

No. 8809

3n tlft Mnxttii i^tal^a

Oltrrmt OInurt af Kppmh

JOE MAZUROSKY,

Appellant,

vs.

UNITED STATES OF AMERICA,

Appellee.

BRIEF OF APPELLEE

•

Upon Appeal from the United States District Court
for the District of Oregon.

STATEMENT OF FACTS

The appellee accepts appellant's introductory
statement concerning jurisdiction of the court and
summary of the three counts of the indictment upon
which the defendant below was convicted- However,
it is respectfully submitted that the summary of

2 Joe Mazurosky vs.

evidence contained in appellant's brief is manifestly
inadequate. The appellee, supported by great
weight of authority as set forth subsequently, pro-
ceeded against the appellant in a prosecution for
violation of iSection 338, Title 18, and Section 88,
Title 18, U.S.C.A., with a substantial amount of
direct evidence and with circumstantial evidence of
great weight, all of which was unchallenged by any
witness for the defense.

The Government prosecuted the appellant on the
theory that the banks with which he did business be-
came his agents in causing the United States Mails
to be used and that he played a definite part in the
scheme and conspiracies alleged by procuring the
collection of checks obtained by the co-conspirators,
by causing the checks to be forwarded through the
United States Mails for collection.

Though appellant suggests that the evidence re-
lating to the five counts of the indictment which
were withdrawn from the jury would not be of as-
sistance to the court, it is submitted, without need
of authority, that all of the evidence in the record
may be resorted to to find proof of the guilt of the
appellant upon the two conspiracy counts and one
substantive count in the indictment, considered by
the jury.

The appellee, the United States of America, as
revealed by the record, proceeded against Joe Mazur-

United States of America 3

osky to show knowledge, intent to use the mails, in-
tent to do a criminal act, and concerted action con-
stituting a conspiracy, by showing in evidence the
following :

During all of the period of time covered by the
evidence the defendant was a business man, engaged
in the pawnshop and jewelry store business in Port-
land, Oregon; he transacted business at three dif-
ferent banks within the City of Portland (Tr. 74,
109, 110, 119) ; he had a long and intimate acquaint-
ance with an arch-swindler, whose true name was
Frank Nelson (Tr. 50, 74, 80) ; Frank Nelson de-
voted all of his energy during the years 1931 to 1936
to practicing a cruel fraud upon aged and infirm
people and had no other means of livelihood (Tr.
03) ; the fraud is vividly described in the testimony
of one of the \dctims of it, namely : the witness H. F.
Belter (Tr. 65), in which the swindlers performed
an obviously and admitted fake operation to remove
a cataract from the eye, and obtained from their vic-
tims large sums of money ; if possible to obtain cash,
they obtained cash; if impossible to obtain cash,
they obtained a check made out to a fictitious per-
son, allegedly a doctor ; it is plain that these checks
made out to fictitious persons could not be cashed
by the swindlers at am^ legitimate place of business
or bank ; in the instant case the checks were obtained
from Adctims in remote sections of Eastern Wash-
ington and as far east as Colorado ; each check was

4 Joe Mazurosky vs.

forwarded by the two groups of conspirators de-
scribed in the indictment to Joe Mazurosky in Port-
land, Oregon, and he cashed each one, retaining a
commission of 10% and 15%, as evidenced in the tes-
timon}^ of Frank Nelson, a co-conspirator (Tr. 64),
and John Gray, a co-conspirator (Tr. 91).

The Government went back as far as 1025 to
show that Joe Maziirosk^^, appellant, had knowledge
of the scheme to defraud, as revealed by the testi-
mony of the witness Henry Wagner (Tr. 69, 83),
and further, to show that appellant had knowledge
of the unlawful means by which the co-schemer and
conspirator, Frank Nelson, alias "Slats" (Tr. 65)
obtained checks from victims, made out to fictitious
persons and readih^ accepted by appellant Mazur-
osky, though he at that time knew the true name
of the prior endorsers on the swindled check, which
is Government's Exhibit 7. Henry Wagner, a victim,
described the fake eye operation to Mazurosky in
1925, and John Goltz, Portland police detective, in-
terviewed the appellant in 1925 ; the fact of an in-
terview by a police detective, mthout the detail of
information furnished by the victim and the detec-
tive in 1925, was in itself sufficient to show knowl-
edge of an unlawful scheme practiced by associates
of the appellant and aided by the appellant, to the
extent that he, as holder of the fraudulently ob-
tained check, placed it in the hands of an attorney
to enforce collection (Tr. 84) and later accepted the

United States of America 5

sum of $1000 from the swmdler, Frank Nelson (Tr.
52), "to square that check."

The appellant was on such friendly and intimate
terms with Frank Nelson in 1931 that he went on a
vacation trip with him for about four days and
loaned Nelson money without security on numerous
occasions (Tr. 60, 61).

The appellant was also acquainted with and in
communication with another arch-criminal and
conspirator practicing the same fraud upon aged
victims, whose name was Roy Martin. In 1934 Roy
Martin, iJohn Gray, and T. A. Andrews were, wdth
the assistance of the appellant, who cashed the
checks obtained, practicing a scheme to defraud
similar to that above described. In October of 1934
a check in the amount of $450 had been obtained
from Christine Mershon (Tr. 99) . In that particular
instance a combination of the eye racket and a ra-
dium belt scheme had been used by John M. Gray,
T. A. Andrews, and Roy Martin. Roy Martin, among
other aliases, was using the name R. E. Terrill.
Martin forwarded the Mershon check ( Government's
Exhibit 1) to the appellant Mazurosky, who cashed
the same and deducted 15% as his commission. The
check was made out to the fictitious payee, H. J.
Pierce (Tr. 86-7). Mazurosky knew Martin as R. E.
Terrill and disbursed money to him under that name
in October of 1934 (Tr. 151) and again in July of
1936 (Tr. 149).

6 Joe Mazurosky vs.

The appellant's own admission against his inter-
est is ihsit he called at the office of the Western
Union Telegraph Company in Portland, Oregon, in-
quiring for telegraph money orders which may have
been sent by him over the periods of 1934 and 1935
under his true name of Mazurosky or the assumed
name of Morris (Tr. 130).

Further, to show knowledge of the scheme in
which Mazurosky was participating in October of
1934, when Government's Exhibit 1, the Mershon
check, was obtained by fraud by Mazurosky's co-
conspirators, it will be noted that in December of
1934, two additional Portland police detectives in-
terviewed the appellant to ascertain the identity of
the prior endorsers on the Mershon check, Govern-
ment's Exhibit 1. The appellant falsely stated to the
detectives that the person from whom he received
the check was a doctor and had purchased some
goods from him (Tr. 104, 106), whereupon these de-
tectives informed the appellant that the check
which he had cashed was obtained in a "bunco"
game. The swindle of the Mershon victims was in
October of 1934 by John M. Gray and T. A. Andrews,
aided by R. E. Terrill.

Mazurosky falsified to the police investigators
concerning his knowledge of the identity of these
swindlers of the Mershon check, because about thir-
ty days before there had come into his possession a
cashier's check in the amount of $500, obtained by

United States of America 7

the same fraudulent scheme from Clara E. Allen,
of Longmont, Colorado, on September 12, 1934, by
the arch-criminal and co-conspirator John M. Gray,
with aliases, and T. A. Andrews (Tr. 86, 95, 101).
Upon receiving possession of that cashier's check in
the amount of $500 from the swindlers, Mazurosky
went to one of his banks, the United States National
at Portland, and presented the cashier's check for
collection with instructions "Please rush ; wire fate",
and with the further instruction to send the cashier's
check by air mail (Tr. 119).

In October, 1935, Frank Nelson and his "part-
ner", Mr. Londergan, victimized H. F. Belter in the
country near Kennewick, Washington, with the
same pretended eye operation, defrauding Mr. Bel-
ter of $800 (Tr. 54) . Nelson and Londergan pretend-
ed to be Dr. Miles and J. C. Adams, respectively
(Tr. GG). The appellant Joe Mazurosky almost im-
mediately came into possession of the $500 check
(Government's Exhibit 4) (Tr. 136), sending it
thi'ough one of his banks, the Bank of California,
N.A., Portland, Oregon (Tr. 109), where, at the per-
sonal request of Mr. Mazurosky, it was sent directly
to the bank upon which it was drawn, and, contrary
to usual custom, not through the Federal Reserve
System. Furthermore, to show knowledge upon the
part of the appellant, he requested also that a no
];)rotest stamp be affixed to this check (Tr. 110).

8 Joe Mazurosky vs.

Subsequently, in further negotiations concern-
ing the Belter check, it was proven that on October
20, 1935, Mazurosky again presented said check to
the Bank of California, with the specific request
"Please hold for a few days if necessary", and "Re-
mit in Portland exchange". It will be recalled from
the testimony of H. F. Belter, the victim, that when
he was victimized he informed the swindlers that
"the check would be good in a few days" (Tr. 67),
from which there is no other inference but that the
appellant Mazurosky was in communication with
the criminals and was informed by them that the
check would be good in a few days.

It is notable that about three months later, in
December of 1935, the appellant received another
check, the last (prior endorsement of which was "J.
C. Adams" (Government's Exhibit 5). This check
was obtained by the same Frank Nelson, alias
"Slats" from E. C. Deibert (Tr. 75). Concerning
that check and concerning the prior endorser, "J. C.
Adams", the appellant stated to detectives of the
Portland police, W. E. Williams and O. A. Powell
(Tr. 78, 80), that he had known "Adams" for about
sixteen years ; that he knew "Adams" as "Slats",
and that "Slats" was an eye specialist bunk as far
as he knew. The latter is an undenied admission by
the appellant Mazurosky that he knew the details
of the scheme by which the fraud he furthered Avas
perpetrated.

United States of America 9

POINTS AXD AUTHOEITIES

I.

One Avho witli guilty knowledge joins himself,
even slightly, to a criminal conspiracy is guilty as
a principal.

Schwartzberg vs. United States, 241 Fed. 348.
Silkworth vs. United States, 10 Fed. (2d) 711.
Hume YS. United States, 118 Fed. 689.
Alexander vs. United States, 95 Fed. (2d)

873.
Levey et al vs. United States, 92 Fed. (2d)

688.

II.

The scheme to defraud charged in the indict-
ment amounts to a criminal conspiracy and is not
terminated until the spoils are collected.

Hartzell vs. United States, 72 Fed. (2d) 569.
Tincher vs. United States, 11 Fed. (2d) 18.
Alexander vs. United States, 95 Fed. (2d)

873.
United States vs. Kenofskey, 243 U. S. 440.

III.

Under Title 18, Section 338, it is sufficient to
warrant conviction to show that the mails were, in
fact, used in furtherance of the scheme to defraud,
regardless of a prior intent.

Silkworth vs. United States ,10 Fed. (2d) 711.
Chew vs. United States, 9 Fed. (2d) 348.
Farmer vs. United States, 223 Fed. 903.

10 Joe Mazurosky vs.

IV.

In prosecutions of this nature, great latitude in
the introduction of testimony is allowed.

Williamson vs. United States, 207 U. S. 425.
Smith vs. United States, 267 Fed. 665.
Hartzell vs. United States, 72 Fed. (2d) 569.

V.

Evidence of guilty knowledge may be inferred
from circumstances alone, and evidence to show
guilty knowledge is liberally received; its admissi-
bility rests with the sound discretion of the trial
court.

Johnson vs. United States, 22 Fed (2d) 1.
Mitchell vs. United States, 229 Fed. 357.
Corbett vs. United States, 89 Fed. (2d) 124.
Ketterbach vs. United States, 202 Fed. 377.
Williamson vs. United States, 207 U. S. 425.

VI.

Where the guilt of a defendant is clearly estab-
lished on the whole case, errors in the admission or
exclusion of evidence must be substantial and clear-
ly prejudicial to warrant reversal.

Smith vs. United States, 267 Fed. 665.
Williams vs. United States, 265 Fed. 625.

ARGUMENT

We will engage in a brief discussion of appel-
lant's argument, in the order in which it is offered

U7iited States of America 11

in appellant's brief.

Respecting Count Four of tlie indictment, based
upon the mailing of a draft by the First National
Bank of Kennewick, Washington, to the Bank of
California in Portland, Oregon, it is alleged that
anyone cognizant of banking practice might foresee
that the original check must find its way to the
drawee bank, the first bank being the agent of the
depositor ; but it is alleged that the Bank of Kenne-
wick was not the agent of the appellant when re-
turning its draft in payment. We believe that in
appellant's lengthy diversion to civil law in support
of this contention, he has overlooked two important
considerations, namely: (1) that the facts developed
in the trial of this case showjed not only that the
mails were actually used by the Bank of Kennewick,
but they were used as the result of the specific re-
quest of the appellant that the agencies for collec-
tion, one of which Avas the Kennewick bank, remit
in Portland exchange; (2) the rule being that the
actual use of the mails in furtherance of a scheme
to defraud, without a prior intent that the mails
be used, is sufficient to prove this count of the in-
dictment, the pretense of a lack of agency is of no
avail ; the end being to collect the spoils as quicklj^
as possible, both the local bank and the Kennewick
were in fact agents to accomplish that end.

Further, concerning the proposal that the appel-
lant did not know or have reason to know that the

12 Joe Mazurosky vs.

Bank of Kennewick would send its draft through
the mails, we submit that, contrary to appellant's
contention, appellant did in open court, by his 0T\ai
admission against his interest, acknowledge the
customary usage and course of business of the Bank
of Kennewick and all other banks with which he was
doing business. We believe, in view of the above,
that the civil authorities cited by appellant are not
of assistance in determining the necessary elements
of the crime charged against the appellant.

Under the principles here involved, we further
submit that the rules of evidence to the effect that
the presumption of innocence must prevail do not
apply in face of the indisputable fact that the mails
were used.

Respecting appellant's contentions concerning
Counts Seven and Eight, the conspiracy counts, that
there is no substantial evidence to show that it was
a part of the agreement that the mails be used, we
respectfully urge that there was ample circumstan-
tial evidence from which the jury could find this
concededly necessary element. Some of these cir-
cumstances were as follows :

In 193.3 the appellant specifically requested the
United States National Bank of Portland to air
mail the draft obtained by fraud from Clara Allen;
he conceded knoAvledge of customary usage and
course of business of the banks ; he w^as a business

United States of America 13

man of long experience ; he was playing a part in a
conspiracy which he could plainly see required an
individual who might, with pretense of good faith,
receive the swindled checks from whatever distant
points the swindlers might send them and place
them in legitimate banking channels for collection
according to the custom and usage of banks; the
checks, made out to fictitious payees and criminals,
could nx)t be cashed by them at the banks in the vi-
cinit}^ of their criminal operations.

Again, appellant contends that there is no sub-
stantial evidence to show that the defendant Avas
one of the co-conspirators. We resort to the mass
of undisputed and unexplained circumstances in the
evidence :

A 10% and 15% commission for cashing a check
cannot be said to be a legitimate commercial trans-
action; in each instance when the appellant played
his part by placing the swindled checks in banking
channels in order that the spoils might be actually
obtained, he did so with special instructions to his
agents, the banks, and revealed gTeat haste to pro-
duce the proceeds; he acted so energetically in the
furtherance of the scheme of his co-conspirators that
he accepted each of the negotiable instruments ob-
tained by fraud, not only without regard to the il-
legality of their origin, but \\ithout regard to the
fictitious character of the prior endorsements,
which he admittedlv knew; it is shown conclusively

14 Joe Mazurosky vs.

that he was acquainted Avith the conspirator, Martin,
but the evidence of his acquaintance with the con-
spirator, Gray, is not so complete ; it is evident, how-
ever, that he communicated with the conspirator,
Gray, through Martin, whom he knew as Terrill, be-
cause the appellant accepted the Mershon check
(Government's Exhibit 1), with Gray's fictitious
signature upon it ; over a period of years the appel-
lant could have revealed the true identity of the
operators of the eye doctor racket to the Portland
police in response to their inquiry, but instead he
continued to accept their 10% and 15%.

The unlawful conspiracy described in each of
these two counts is shown by the mass of evidence
of concerted action in which the appellant joined.

Appellant complains that Nelson did not testify
that he had conversations with Mazurosky in such
a way as to inform him, but Mazurosky admitted to
police detectives in 1935 that, as far as he knew,
''Slats" (Xelson) had been engaged with Dr. Brown
in the eye fraud, and that he had known him for
about sixteen years.

POINT I.

One who with guilty loiowledge joins himself,
even slightly, to a criminal conspiracy is
guilty as a principal.

The foregoing statement of facts has revealed in

United States of America 15

what manner and over what period of time the ap-
l>€llant joined himself with the conspirators in the
field who performed the pretended eye operations.
The Circuit Court of Appeals for the Second Cir-
cuit, in Schwartzberg, et al, vs. United States, supra,
a mail fraud prosecution, made pointed comment to
the argument on the part of one schemer or co-
conspirator that his was a very small part in the
wrong-doing :

"But all who with criminal intent join them-
selves, even slightly, to the principal schemer
are subject to the statute, although they maj^
know nothing but their own share in the aggre-
gate wrong-doing."

The same principle is repeated in Alexander vs.
United States, supra (8th C.C.A., April 12, 1938),
wherein, in this most recent mail fraud cause, the
Court ruled:

"The fact that he (one of the schemers)
came in long after the plan had had its begin-
nings or that he did not take part in carrying
out each phase of it * * * does not absolve him
of complicity at the times mentioned."

In the instant case the record reveals that the
apipellant did, in fact, come into the scheme upon
every occasion when it was necessary to collect the
spoils through banking channels. It is true that, so
far as the record shows, the appellant did not at
any time go into the field and practice the deception
practiced by his co-conspirators. Gray and Andrews

16 Joe Mazurosky vs.

on the one hand and Nelson and Londergan on the
other.

In the case of Silkworth, et al, vs. United States,
10 Fed. (2d) 711, plaintiff in error Gilbaugh was
the floor broker on a stock exchange. He assisted a
co-partnership member of the exchange in carrying
out a bucketing scheme. He made a few suggestions
as to how the fraudulent operators should conduct
their scheme and gave them information necessary
for their protection. He contended on appeal that
he did not take part in the scheme itself. But he did
have knoAvledge of the insolvency of the co-partner-
ship and continued to execute their orders for
bucketing thereafter. The Court commented :

"To satisfy a jury that he was a participant
of the scheme to defraud customers was an easy
task under the circumstances and they found
him guilty. If his intent was criminal when he
joined a dishonest enterprise, he was part
of the scheme. * * * All who Avith criminal in-
tent join themselves, even slightl}^, to the prin-
cipal schemer are subject to the statute, al-
though they may know nothing but their own
share of the aggregate wrong-doing."

It is submitted that this principle is often re-
peated by the appellate courts and that, taking the
appellant ^lazurosky's contentions almost as a
whole, coupled, for the sake of argument only, with
the admissions against his interest given to the wit-
ness, Post Office Inspector C. B. Welter, he cannot

United States of America 17

escape being held subject to the statute.

This Honorable Court has applied the same prin-
ciple in Levey vs. United States, 92 Fed. (2d) 688.
Mazurosky worked with the others mentioned when-
ever the occasion arose. He accomplished the actual
procurement of the spoils. His was a greater part
than that played by Levey in the above Ninth Cir-
cuit case.

"It is also contended that the evidence is in-
sufficient to sustain a conviction on the con-
spiracy count. This contention may be briefly
disposed of. Levey worked with others and de-
frauded investors. The jury could properly in-
fer that Levey and the others had agreed to do
so. In fact, it would do violence to the evidence
to infer the contrary."

rOIXT II.

The scheme to defraud charged in the indict-
ment amounts to a criminal conspiracy and
is not terminated until the spoils are col-
lected.

More recent decisions plainly assert that the
scheme to defraud contemplated in the statute is
analogous to a criminal conspiracy. Therefore, when
applicant Mazurosky participated in the scheme
practiced by Gray and Anderson and Nelson and
Londergan to the extent that he played a major part
in accomplishing collection of the spoils, he assumed
(responsibility for their fraudulent acts and fur-
thered them in the manner stated.

18 Joe Mazurosky vs.

In Alexander vs. United States, supra (which
includes three other cases), a criminal prosecution
was instituted against numerous defendants under
the mail fraud statute under the theory that they
had planned and consummated a scheme to defraud,
using the mails, by organizing a fictitious school of
chiropractics, printing and sending through the
mails fictitious diplomas from the school. In that
case the appellant Debeh was one of the parties who
knowingly received a fictitious diploma through
the mails and fraudulently pretended to practice a
profession under it. It was urged on his behalf that,
no matter how reprehenisble his conduct, he could
not be tried for violation of Section 338, Title 18.
However, the court sustained his conviction because,
with knowledge of the existence of an unlawful en-
terprise, he aided it. The Court apx^lied this prin-
ciple :

"Again, in determining Avhether Debeh was
a party to the scheme charged, we may refer to
the law of conspiracy for helpful analog}^, since
a scheme such as this, participated in by more
than one individual, constitutes in fact a con-
spiracy."

In Tincher vs. United States, 11 Fed. (2d) 18,
Tincher and others were convicted of a violation of
the mail fraud statute because of a scheme devised
to place a fictitious value upon an oil lease. Other
parties to the scheme used the mails; Tincher made
the personal contact with a victim and made certain

United States of America 19

false representations to him. The court placed the
responsibility upon all of the participants to the
ifraud. As to Tincher the court said:

''In such case the mailing of the letter was
in law the act of all the defendants."

In this same authorit}^ from the Fourth Circuit
Court of Appeals the court foresaw appellant's con-
tention that his was not a part of the scheme and
that the Kennewick Bank was not his agent as
charged in Count Four of the indictment. The rule
of reason is applied:

"The collection of the checks was a neces-
sary part of the working out of the scheme. In
fact it Avas through the collection of these checks
that the defendants collected and divided the
spoils of their fraud."

The Supreme Court of the United States was
confronted with similar contentions in United States
vs. Kenofskey, 243 U. S. 440. In the lower court the
defendant Kenofskey successfully contended upon
demurrer that the scheme of procuring a false claim
to be paid by an insurance company was fully exe-
cuted Avhen he handed the false claim to a local
agent of the company, who innocently mailed it to
a distant point. The action reached the Supreme
Court under the Criminal Appeals Act, and that
Honorable Court tersely ruled :

"We do not think the scheme ended when
Kenofskey handed the proofs to his superior

20 Joe Mazurosky vs.

officer. As said by the Assistant Attorney Gen-
eral, 'the most vital element in the transaction
both to the insurance company and to Kenof-
skey remained j^et to become an actuality, that
is the payment and receipt of the money.' Such
payment and receipt would, indeed, have exe-
cuted the scheme, but they would not have
served to 'trammel up the consequence' of the
fraudulent use of the mails."

POINT III.

Under Title 18, Section 338, it is sufficient, to
warrant conviction, to show that the mails
were in fact used in furtherance of the
scheme to defraud, regardless of a prior in-
tent.

Since appellant's brief concedes the distinction be-
tween the necessity of proving intent to use the mails
under Count Four of the indictment and under
Counts Seven and Eight, we pass a detailed discus-
sion of authorities cited. We submit the point is of
importance in answering appellant's contention con-
cerning the lack of evidence and lack of agency under
Count Four of the indictment.

"It is not necessary to prove that any of the
plaintiffs in error, including this one, at the
time they entered into the common scheme, in-
tended to use the mails. // is enough that tlw
mails ivcre used in its execution.^'

Silkworth vs. ITnited States, 10 Fed. (2d)
710.

We reiterate that the record shows a definite use of

United States of America 21

the mails in the proof as to Count Four of the indict-
ment.

POINT IV.

In prosecutions of this nature great latitude in
the introduction of testimony is allowed.

During the course of the trial below, the appel-
lant stated objections to the major portion of the
evidence offered by the government as not binding
upon or showing a connection between the appellant
and the other admitted swindlers. Answers to this
contention are found both in authorities under the
criminal statutes now under consideration and un-
der the general principles of circumstantial evi-
dence.

Smith A^s. United States, 267 Fed. 665, a mail
fraud prosecution with conspiracy counts, is author-
ity for the following :

"In prosecutions of this nature great lati-
tude in the introduction of testimony is allowed,
as in most instances the offense can only be
established by circumstantial evidence."

The same principle is asserted by the Supreme
Court of the United States in Williamson vs. United
States, supra, as applied to circumstantial evidence
generally. We have conceded that a large part of
the evidence in the court below against Mazurosky
was circumstantial evidence. We quote from the
United States Supreme Court in the above case:

22 Joe Mazurosky vs.

"As has been frequently said, gi'eat latitude
is allowed in the reception of circumstantial
evidence, the aid of which is constantly required,
and therefore, where direct evidence of the fact
is Avanting, the more the jury can see of the sur-
rounding facts and circumstances, the more cor-
rect their judgment is likely to be."

More recently, in Hartzell vs. United States, su-
pra, the 8th Circuit Court of Appeals, in August,
1934, referring to the mail fraud statute, at p. 584
of that opinion, stated :

"In prosecutions of this character great lati-
tude is allowed in the introduction of evidence
of attending circumstances. * * * The evidence
admissible to establish the scheme and the in-
tent may be extensive in scope and rests largely
Avithin the jurisdiction of the trial judge."

Without repeating the circumstances in evidence
here, we offer these authorities, with the contention
that they warrant the reception in evidence by the
trial court of all the circumstances revealed in the
record.

roiNT y.

Evidence of guilty knowledge may be inferred
from circumstances alone, and evidence to
show guilty knowledge is liberally received;
its admissibility rests within the sound dis-
cretion of the trial court.

This point is offered, in view of appellant's con-
tention that the testimony of the so-called Wagner
transaction, occurring in the year 1925, was inadmis-

United States of America 23

sible and highly prejudicial to the appellant. We
submit on principle that such evidence was admissi-
ble, not only to show knowledge, but to show the re-
lationship of the various parties. Had the appellant
been acquainted with his co-conspirator. Nelson,
during boyhood, we believe that the fact would have
been admissible e^ddence and that, if incidentally
evidence of another crime was revealed, the evidence
|of the relationship, including that of the other crime,
would, nevertheless, have been admissible.

In Johnson vs. United States, 22 Fed. (2d) 1,
this Honorable Court declared, in response to the
contention that evidence of another offense was
wrongfully admitted and highly prejudicial,

''It was not, in our judgment, error for the
Government to bring before the jury the entire
history of the defendant's connection with the
matter, so it could more intelligently determine
whether he did in fact receive the $2,000 referred
to in the indictment, and, if so, whether he knew
at the time he received it that it had been stolen
from the mail."

In 1913 this Honorable Ninth Circuit Court of
Appeals answered appellant's complaint with re-
spect to the remoteness in time of the Wagner trans-
action, when, in Ketterbach vs. United States, 202
Fed. 377, evidence of a similar transaction occurring
seven years before was admitted over the objections
of the defendant. The Appellate Court stated, at p.
384:

24 Joe Mazurosky vs.

"No limit is placed upon the power of the
court to admit evidence of a series of prior simi-
lar transactions committed by the accused. The
period of time within which the matters offered
to establish the guilty purpose must have oc-
curred to permit their admission is largely dis-
cretionary with the court."

This Honorable Court further directed attention to
authority holding that evidence of a similar offense
committed tAvelve years prior to the transactions de-
scribed in the indictment was admissible. This
Ninth Circuit decision was also based upon Williams
vs. United States, 207 IT. S. 425, w^hich we believe
requires no further comment.

It is to be noted, however, that the instructions
of the trial court respecting this evidence Avere care-
fully worded to properly advise the jury of the limits
under which it should be considered, and that no ex-
ceptions thereto were noted by the defendant below.

VI.

Where the guilt of a defendant is clearly estab-
lished on the whole case, errors in the admis-
sion or exclusion of evidence must be sub-
stantial and clearly prejudicial to warrant
reversal.

This point is made by wa}^ of conclusion. It is
submitted that the gi'eat mass of circumstantial evi-
dence, properly considered by the jur}^ in the trial of
this cause below, permitted of no other interpreta-
tion than that applied by the jury. Without conced-

United States of America 25

ing for an instant that any of the evidence in the
record was erroneously received or prejudicial, we
quote the gi'eat weight of authority as expressed in
Williams vs. United States, 26j5 Fed. 025 :

"Whether prejudice results from the errone-
ous admission of evidence at a trial is a question
that should not be considered abstractly or by
way of detachment. The question is one of prac-
tical fact, Avhen the trial as a whole and all the
circumstances of the proofs are regarded. * * *
It is manifest that he was not prejudiced by the
admission of the testimony to which reference
has been made."

In Smith vs. United States, 267 Fed., at p. 670,
commenting on the Williams, case, the court stated :

"* * * The modern law, so clearly stated by
Judge Hook in Williams vs. United States, ap-
plies."

CONCLUSION

We conclude that the record of the court below
reveals that the appellant had an extremely fair
trial and that the evidence upon which the jury based
its verdict of guilty was ample to justify such a ver-
dict. We find it impossible to enter into a lengthy
discussion of the points and authorities cited by the
ai>pellant, but submit that each is based upon an in-
complete consideration of the facts in the record and

26 Joe Mazurosky vs.

not in conflict witli tlie rules under which appellant
was fairly tried and convicted.

KespectfuUy submitted,

GAEL C. DONAUGH,

United States Attorney for the

District of Oregon,
J. MASON DILLARD,
M. B. STRAYER,
Assistant United States Attornej^s,
Attorneys for Appellee.

p'

No. 8809

IN THE UNITED STATES

Circuit Court of Appeals

FOR THE NINTH CIRCUIT

JOE MAZUROSKY

Appellant

vs.

UNITED STATES OF AMERICA

Appellee

Upon Appeal from the United States District Court
for the District of Oregon

REPLY BRIEF OF APPELLANT

Edwin D. Hicks
Hicks & Adams

515 Pacific Building, Portland, Oregon

Attorneys for Appellant
Carl C. Donaugh

United States Attorney for the District of Oregon

J. Mason Dillard and Manley Strayer

Assistant United States Attorneys for the District of Oregon
506 United States Court House, Portland, Oregon

Attorneys for Appellee

•lORSI 1. SANDT PmilTIII* CO. PORTLAND

SUBJECT INDEX

Page

Foreword 1

Eeply to Point I of Appellee 's Brief ... 2

Eeply to Point II of Appellee 's Brief ... 2

Reply to Point III of Appellee's Brief ... 3

Reply to Arguments Contained on Pages 11 and

12 of Appellee's Brief 4

Reply to Arguments, pages 12 and 13 of Appel-
lee's Brief; Intent to Use the Mails ... 8

Reply to Points IV and V of Appellee 's Brief . 10

Conclusion 17

Index to Appendix 21

11

INDEX TO CASES CITED

Page
Barnes v. U. S., 25 F. (2) 61 (CCA 8) ... 29
Capital Grain & Feed Co. v. Fed. Ees. Bank, 3 F.

(2) 614, 616 7

Coulston V. U. S., 51 F. (2) 178 (CCA 10) . . 12
Federal Reserve Bank of Riclmiond v. Malloy, 264

U. S. 160, 44 Sup. Ct. 296, 68 L. Ed. 617 . . 7
Jennings et al. v. United States Fidelity and

Guaranty Co., 294 U. S. 216, 55 Sup. Ct. 894,

79 L. Ed. 869 (1935) 7,29

Ketterback v. U. S., 202 F. 377 (CCA 9) ... 15
LesHe v. U. S., 43 F. (2) 288, 290 (CCA 10) . . 19
Lonabaugh v. U. S. 179 F. 476, 481 (CCA 8) . 29
Louie Ding v. U. S., 247 F. 12, 15 (CCA 9tli) . . 12
MacLafferty v. U. S., 77 F. (2) 715 (CCA 9) .16
Marshall v. U. S., 197 F. 511 (2d) ... 17, 32
McNear v. U. S., 60 F. (2) 861 (CCA 10) . . . 29
MerriU v. U. S., 95 F. (2) 669 (CCA 9) ... 29
Neal V. U. S., 1 F. (2) 637 (CCA 8) .... 12
Newingham v. U. S., 4 F (2) 490 (CCA 3) . . 28
Spear v. U. S., 246 F. 250 (CCA 8) .... 28
Smith V. U. S., 10 F. (2) 787 (CCA 9) . . 17, 33
State V. Smith, 55 Ore. 408, 106 Pac. 797 . . . 12
State V. Wilson, 113 Ore. 450, 233 Pac. 259 . 12-14
Stewart v. U. S., 119 F. 89, 95. (CCA 8) . . .29
Terry v. U. S., 7 F. (2) 28 (CCA 9) .... 11
Towbin v. U. S., 93 F. (2) 861, 866 (CCA 10) . 18
U. S. V. Kenofskey, 243 U. S. 440, 37 Sup. Ct. 438,

61 L. Ed. 836 28

No. 8809

IN THE UNITED STATES

Circuit Court of Appeals

FOR THE NINTH CIRCUIT

JOE MAZUROSKY

Appellant

vs.

UNITED STATES OF AMERICA

Appellee

Upon Appeal from the United States District Court
for the District of Oregon

REPLY BRIEF OF APPELLANT

FOREWORD

Under the rule of this court, the reply brief may
contain but 20 pages, exclusive of the appendix. This
has necessitated placement in the appendix of one sec-
tion of the material otherwise intended for the main
body of the brief. The material referred to is found
at pages 22 to 28 inclusive, of the appendix. We do not
mean by such devious means to subvert the operation
of the rule, but appellate courts do make some con-

cession in criminal cases where a man's life and liberty
are substantially at stake. We trust the Court will in-
dulge us in this chosen course. The material referred
to is in reply to the discussion found at pages 3 to 8
inclusive of appellee's brief. It should be read in the
interest of a complete understanding of certain salient
portions of the record, and to correct a series of infer-
ences drawn by the government attorneys, which we
respectfully contend are not in the least warranted by
the facts of the case.

Reply to Point I of Appellee's Brief

Argument of this pouit is found beginning at page
14 of apx)ellee's brief. We have no quarrel with the
proposition there contended for. If a party knowingly
joins a conspiracy, he may not excuse himself by say-
ing that his function in the operation of the conspiracy
was but nominal. But he must join with knowledge of
the conspiracy.

Reply to Point II of Appelle's Brief

The argument on this point is found beginning at
page 17 of appellee's brief. It is made in response to
the point presented by appellant beginning at page 28
of the appendix of this brief. By an inadvertance, the
copy on this point did not get to the printer when ap-
pellant's brief was being printed. The copy was fur-
nished counsel, however, and the argument under this
point is in answer thereto.

We can add little to our affirmative presentation
of this question, noted in the appendix. We urge that
the Belter check was collected and the cash received
before the Exhibit 11 was transmitted and that, there-
fore, the acts charged in Count 4 were not in further-
ance of the fraudulent scheme.

Reply to Point III of Appellee's Brief

Argument on this point is found beginning at page
20 of appellee's brief. The contention is that the sub-
stantive offense mider Sec. 338 of Title 18, U. S. C. A.,
may be committed without a prior intent.

Counsel apparently have misconceived the whole
theory of the prosecution on the substantive counts of
the indictment. The rule is that it need not be proven
under this section that it was a part of the fraudulent
scheme that the mails should be used in its execution.
Proof that the mails were used is sufficient. But, to
commit the offense chargeable under the sub-division
of Sec. 338 upon which Count 4 is predicated, the ac-
cused must "knowingly cause to be delivered by mail"
the particular item which it is claimed resulted in the
prostitution of the mails. The cases cited by coimsel
clearly draw the distinction. In the Silkworth case,
cited at page 20 of appellee's brief, it is noted that it
is not necessary to prove that "at the thne the parties
entered into the common scheme''' they intended to
i use the mails. That is the undoubted law as we pointed
I out at pages 44 and 45 of appellant's brief. It is never-
i theless true, that while the scheme itself need not

embrace the mails, the accused in performing the act
under the substantive count must "knowingly cause to
be delivered by mail, ' ' the dociunent which it is claimed
perverts the facilities of the postal establishment.

Perhaps it was the failure of the prosecuting offi-
cials to observe this clear mandate of the statute which
accounts for the paucity, if indeed not the total lack of
any evidence, to show that the appellant knowingly
caused the mailing and delivery of the draft, Exhibit
11, by the Kennewick bank, as charged in Count 4 of
the indictment.

Reply to the Arguments Contained on Pages 11 and 12 of
Appellee's Brief

This pertains to Comit 4 of the indictment and to
the discussion contained in appellant's brief beginning
at page 23 and ending at page 39. Comisel simunarily
dismiss the whole subject by suggesting, (1) that the
Bank of Kennewick used the mails at the "specific
request" of the appellant and that appellant specific-
ally requested that the remittance be made in Portland
exchange, and, (2) that it need not be shown that the
appellant had a "i)rior intent" that the mails should
be used by the Bank of Kennewick in making the re-
mittance. The point under subdivision (2) is considered
beginning at page 3 of this brief, in response to the
identical argument made under point III of appellee's
brief, beginning at page 20 thereof. We refer now to
the record itself to show that ai)pellant did not make

a specific or any other kind of a request that the mails
be used or that the remittance should be made in Port-
land exchange.

Counsel do not state where in the record this "spe-
cific request" was made, and after diligent search we
are unable to find it. The only request made by the
defendant, as shown by the record, was that a "no
protest" stamp be placed "on the face of the check"
(R. 109), and that the check be sent "direct" to the
bank. This special request was not made when the
check was subsequently sent through for collection, but
at the time the check was deposited by defendant in
his savings account. The Court will recall that the check
was returned unpaid by the Kennewick bank after it
had been forwarded by the Bank of California the first
time. It was on this occasion that the siDCcial instruc-
tions were given by appellant and these instructions
were limited to the "no protest" stamjD and to the re-
quest that the check be sent "direct" to the bank. When
the check was returned to the Bank of California, the
defendant was notified that it had not been paid, and
thereupon he accepted return of the check, and the
bank charged his savings account in the sima of
$500.00. (Pt. 110.) The appellant thereupon took the
check to the collection department of the bank and sent
it through for collection. Upon being sent through for
collection, the check was accompanied by the triplicate
form which is Government Exhibit 9. Three witnesses
testified in respect to this exhibit. E. F. Mmiley iden-

tified Exhibit 9 as "a record of our bank concerning
the Belter check"; "we call this record a collection
register." (R. 107.) The witness Allen simply testified:
"I have looked at 'trijDlicate form No. 9'." And the
third witness, J. L. Bliss, simply noted that Exhibit 9
accompanied the check when it was sent through for
collection, and that he made some notation in his own
handwriting. (R. 116.) The witness Bliss was identi-
fied with the First National Bank of Kennewick. By
reference to the original Exhibit No. 9, it will be seen
that the only handwriting on the exhibit is that of the
initial "J," that being the initial of the witness J. D.
Bliss which was placed thereon by him as he testified.
Now we ask counsel, where in the record is it shown
that appellant "specifically requested" that remittance
should be made in Portland exchange ? No witness from
the Bank of California or from any other quarter testi-
fied that the appellant instructed that the remittance
should be made in Portland exchange. The fact that the
Bank of California did make this notation on the col-
lection register. Exhibit 9, does not carry the inference
that the defendant "specifically requested" that it be
placed there. The term ' ' Portland exchange " is a bank-
ing term of which the defendant had doubtless never
heard. We find the same situation here as the Supreme
Court found in the Malloy case, noted at pages 31 to 35
of appellant's brief.

Counsel further contend in this same connection
that ai3pellant acknowledged in open court the custom-

ary usage and course of business of the Bank of Ken-
newick and all other banks with which he was doing
business. (App. Br. pp. 11, 12.) By this statement,
counsel must have referred to the stipulation found on
page 128 of the record.

It is the only admission we can find even remotely
touching on counsel's conclusion. The stipulation, of
course, speaks for itself. It was simply stipulated that
the draft. Exhibit 11, was forwarded by the Kennewick
bank to the Bank of California, and that it was the
custom and practice and ordinary course of business to
transmit such items as drafts by sending them through
the mails. The stipulation does not recite that it was the
custom and practice and ordinary course of business
for the bank to remit funds collected by it by a draft
drawn upon a correspondent bank. The provision of the
•stipulation was that the bank did forward its draft and
that when it had occasion to so forward a draft, it used
the United States mails as the means of forwarding
such items. The Court will judicially notice that it is
not the custom and practice and ordinary course of
business for any bank to remit an item collected by it
by means of its own draft. Federal Reserve Bank of
Richmond v. Malloij et al., 264 U. S. 160, 44 Sup. Ct.
Rep. 296, 68 L. Ed. 617 ; Jennings v. United States Fi-
delity and Guaranty Co., 294 U. S. 216, 55 Sup. Ct. Rej).
394, 79 L. Ed. 869 (1935). In the case of Capital Grain
d Feed Co. v. Fed. Res. Bank, 3 F. (2) 614, 616 (D. C.
Ga.), it was held that a statute of a state authorizing

8

remittance of a collected item to be made by an ex-
change draft, was miconstitutional and void, as being
in derogation of the express terms of the order appear-
ing upon the face of the check.

We direct attention at this point to an erroneous
statement made at page 35 of appellant's brief. It is
there stated that it was not shown that there was an
understanding between the banks defining the terms
of the remittanc. It is true, as we have shown, that the
Bank of California did note a special instruction that
remittance should be made by Portland exchange.

It is respectfully submitted, subject to the correc-
tion just noted, that the authorities and discussion pre-
sented at pages 26 to 36 inclusive of appellant's open-
ing brief are controlling on this particular point, and
that by reason thereof the conviction should not stand
as to Comit 4 of the indictment.

Intent to Use the Mails; Counts VII and VIII

At pages 12 and 13 of appellee's brief, is contained
response to the argument of apjiellant appearing at
pages 40 to 46 inclusive of appellant's brief on the
proiDosition that there is no substantial evidence to
show that it was a part of the agreement comprising
the conspiracy that tlie U. S. mails should be used in
executing it.

The argument is tliat because the appellant in 1933
(the record shows 1934, R. 142) instructed the U. S.
National Bank of Portland to airmail a draft ; because

he was a business man of long experience and because
the ''swindlers" sent checks to defendant from distant
points to be placed through legitimate banking chan-
nels for collection, and because the checks could not be
cashed at the banks in the vicinity of the criminal oper-
ation, sufficient proof of intent to use the mails is
made out.

The facts as thus stated are grossly garbled. Gray
testified that between 1930 and 1935 the Martin-Gray
gang of conspirators had defrauded "probably a thou-
sand" persons in execution of the eye frauds. (R. 98.)
Only in two of these transactions, one out of every 500,
was it shown that the mails were used. The record
shows that in each instance the conspirators endeavored
to obtain the money and cash the check at the particular
point where the fraud was perpetrated. (R. 57, Wag-
ner ; R. 55, Belter) . The Deibert check was post-dated,
and, therefore, coidd not be cashed at the time ; the con-
spirators in this instance did, however, go to the bank
with Mr. Deibert to get the money and he didn't have
it; hence the post-dated check. The conspirators like-
i wise went with Mr. Belter to his bank to obtain the
: money (R. 55). The record does not show whether the
' conspirators attempted to cash the Mershon check at
I the bank on which it was drawn (R. 86). In the Allen
j transaction, Miss Allen did not have the money in the
! bank, but the conspirators accompanied her to the bank
to get the money (R. 93). From the foregoing evidence
^ we are miable to join in the conclusion that the

10

*' checks . . . could not be cashed at the banks in the
vicinity of their criminal operations. ' ' The proof shows
quite to the contrary, and the only reason these par-
ticular checks were not cashed on the ground was be-
cause the parties did not have the money in the bank.
In the absence of proof to the contrary, it may be as-
sumed that the other 998 checks received by the Martin-
Gray group were cashed right at the time the checks
were received. The record shows such a course to have
been their modus operandum.

It is again reiterated that the proof received in the
case brings this case squarely and unequivocally within
the rule of the Farmer and Schwartzberg cases, supra
(App. Br. pp. 40 to 46 inclusive), and that there is an
absence of any evidence sufficient to show that it was
a part of the agreement comprising the conspiracy that
the U. S. mails should be used in executing it.

Reply to Points IV and V of Appellee's Brief

Points IV and V of the brief of appellee are appar-
enly directed to a justification of the testimony relat-
ing to the Wagner transaction and to appellant's Brief,
pages 59 to 64, inclusive.

No attemi)t is made to answer the arguments ap-
pearing in appellant's affirmative presentation of this
subject. Instead, counsel quote a few cases, all without
any reference to the facts of this case, and conclude
generally that because the courts have given some dis-
cretion to the trial court, and because some latitude has

11

been given in the proof of conspiracies, the proof here
was acceptible.

It will be observed that counsel do not make a claim
for this testimony that it tended to show that appellant
was a party to the conspiracy of Brown and Nelson
which existed in 1925. The record clearly shows that
not to have been the fact (Ai3p. Br. 59 to 64), and ap-
parently this point is conceded. We are then confront-
ed with the rule which has never been questioned in
any court, that to be admissible in evidence the acts
of a co-conspirator must be done while the conspiracy
is pending- and in furtherance of its object. That acts
of a co-conspirator prior to the formation f the par-
ticular conspiracy charged in the indictment, may not
be received in evidence; that evidence of disconnected
smaller conspiracies directed to the same end as that
defined in the general conspiracy charged in the in-
dictment, will not be received, even though there may
be an identity as to some of the parties in the two con-
spiracies. See Terry v. U. S., 7 F. (2d) 28 (C. C. A. 9)
and cases cited at pages 63, 64, App. Br.

The theory apparently is that though this testimony
was inadmissible on the above grounds, it was admis-
sible on others which comisel assign, to wit: To show
knowledge and to show the relationship of the various
parties. Such are the theories on which counsel offered
this evidence at the trial (H. 53).

The evidence then must be tested on each of the
grounds assigned to determine its admissibility.

12

The rules of evidence governing Federal Courts in
criminal cases arising in the State of Oregon, are those
which the local courts adopted in their usual daily prac-
tice when Oregon was admitted into the Union. Louie
Ding V. U. S., 247 F. 12, 15 (C. C. A. 9th) ; Neal v. U. S.,
1 F. (2d) 637 (C C. A. 8) ; Coulston v. U. S., 51 F. (2d)
178 (C. C. A. 10). We look then to the rule as estab-
lished in Oregon in 1859, as evidenced by the decisions
of the Oregon Supreme Court.

Attention is directed to the case of State v. Smith,

55 Ore. 408, 106 Pac. 797. At page 416 of the opinion,

is found the following rule:

''It is generally conceded that where the proof
tended to show that the accused party and his asso-
ciate had conspired to do an imlawful act, evidence
of other transactions in furtherance of the conmion
enterprise is relevant. Elliott, Ev. No. 2939." . . .
''that in all other instances the admission of evi-
dence of substantive offenses is the same in cases
of conspiracy as in crimes committed hy only one
person, and in support of this deduction reference
will he made to a few cases of the latter class."

The Wagner transaction was "another offense" un-
der the definition and since no claim is made that defen-
dant was a party to the conspiracy in 1925, then the
rules generally applying to the admissibility of other
offenses, in substantive crimes, apply here.

The Rule in Oregon

The Oregon rule is exhaustively discussed by Justice
Burnett in the leading case in this state. State v. M^il-
son, 113 Ore. 450, 233 Pac. 259, wherein the learned

13

justice reviews the early cases as well as the later ones
in defining- the rule. We quote from the opinion, at
pp. 30, 31 of the appendix of this brief, to which refer-
ence is made.

Before applying the rules as thus enunciated, a dis-
tinction should here be noted. The testimony relating
to the Wagner transaction which occurred in 1925 con-
sisted of (a) acts performed by the conspirators Brown
and Nelson out of the presence of the defendant, in
connection with a conspiracy in which appellant was
not a party, and (b) statements made by the witness
Wagner to the appellant by which he was informed that
the consx3irators Brown and Nelson had defrauded
Wagner. (B. 83; App. Br. pp. 9 to 13, inc.)

Since the testimony under classification (a) relates
exclusively to a fraud perpetrated by Nelson and
Brown, it is difficult to see how those acts can have any
relevancy as to appellent. Under none of the rules per-
mitting reception of testimony of other offenses, will
a category be found into which this line of proof may
be placed. The appellant may not be convicted upon
testimony concerning the wickedness of others. Since
he was not there, such proof cannot serve to show the
"evidence of relationship" which counsel claim for it;
since the appellant was not there, it cannot show the
"knowledge" which counsel claim for it. For such tes-
timony to be admissible it must be shown that the party
who is on trial committed the other offense, thereby
connecting the state of mind of the accused in the for-

14

mer offense, with that of his subsequent act. The Su-
preme Court, in the case of State v. Wilson, supra,
expresses the thought in the following- language (113
Ore. 450, 498) :

"No defendant ought to be deprived of his lib-
erty by hue and cry or by the mob-yell of 'Crucify
him,' but only upon an indictment constitutionally
framed and proven hy evidence of crimiiiaJ acts,
a connection between ivliich 'must Jiavc existed i:\
the mind of the actor, linking them together for
some purpose he intended to accomplish/'

Thus, about one-third of the entire record, practi-
cally the whole of the testimony relating to the Wagner
transaction, was admitted ui)on theories which were
both obviously unsound and in flagrant violation of
indisputible rules of evidence to which we have re-
ferred here and in the opening brief.

(b) The testimony given by the witness Wagner to
the effect that he told the appellant of the fraud that
had been perpetrated upon him is a horse of a differ-
ent color. This testimony can have no relationship to
the mass of the evidence concerning acts done by Nel-
son and Brown, unbeknown to appellant. This evidence
would serve to show knowledge to the extent of the exact
statements made to api^ellant by the witness. This par-
ticular bit of the evidence, which took up about one
minute of the trial, would be admissible to show knowl-
edge of the conspiracy which existed in 1925, and would
be relevant were it not so remote in time and if it were
not for the further fact that such statements referred

15

to another conspiracy altogether. The two phases of
the proof are objectionable on entirely distinct and
separate grounds, and each are prejudicial for differ-
ent reasons, as we have endeavored to show.

Counsel suggest the transaction was not too remote
m time to be of evidential value, and cite Ketterhack
V. U. S., of this circuit, 202 F. 377 (Appellee's Br. p.
23), in support of this conclusion. We cited the fore-
going case at page 62 of appellant's brief to clearly
distinguish the facts of the instant case from those
shown in that decision. In the Ketterback case there
was a series of transactions extending back seven
years — all leading from one act in an extensive chain
to another, year by year, right up to the act charged
in the indictment. The evidence there was of the most
convincing sort and was clearly admissible. Here, how-
ever, we have a single, isolated transaction extending
back ten years — with a lapse of ten years between the
time the transaction was completed, and the time an-
other of the checks was taken, with the further fact
irrefutably appearing that the party here sought to be
charged was not a party to the fraudulent conspiracy
then in process.

The Rule in the Ninth Circuit
This court has heretofore condemned in strong lan-
guage an attempt by prosecutors to convict an accused
upon testimony of the character mentioned in the as-
sigimaents. We have heretofore and in the opening brief

16

discussed the Terry case. (App. Br. p. 63.) We con-
clude this phase of the discussion by quoting from the
opinion of Garrecht, C. J., in MacLafferty v. U. S.,
77 F. (2d) 715 (C. C. A. 9) :

"We hold that before the evidence in relation
to these prescriptions other than the ones described
in the indictment could be admittd in evidence it
was necessary for the government to show that
such other prescriptions or sales were connected
with actual violations of the law. The rule to he
applied in such cases is set forth in CouUton v.
United States, (C. C. A. 10) 51 F. (2d) 178, at
page 180, cited by appellee, where the court speaks
as follows: 'In the civil law, and very early in the
common law, evidence of other crimes was admit-
ted on the theory that a person who has conmiitted
one crime is apt to commit another. The inference
is so slight, the unfairness to the defendant so
manifest, the difficulty and delay attendant upon
trying several cases at one time so great, and the
confusion of the jury so likely, that for more than
two hundred years it has been the rule that evi-
dence of other crimes is not admissible. Boijd v.
United States, 142 U. S. 450, 12 S. Ct. 292, 35 L.
Ed. 1077; Hall v. United States, 150 U. S. 76, 14
S. Ct. 22, 37 L. Ed. 1003; Nirderlueeke v. United
States, (C. C. A. 8) 21 F. (2d) 511; Cucehia v.
United States, (C. C. A. 5) 17 F. (2d) 86; Smith
V. United States, (C. C. A. 9) 10 F. 787; Wigmor/
on Evidence, (2d Ed.) Sec. 194. Corpus Juris cites
cases from forty-four American jurisdictions in
support of this rule. 16 C. J. 586. There are many
exceptions to the rule, the most common of which
is that, if the prosecution must show a specific
intent, evidence of other similar offenses may l)e
used to establish that fact."

17

"The particular exceptions here under discus-
sion are noted in Paris v. U noted States, (C. C. A.
8) 260 F. 529, at page 531, where the court, after
citing- some of the authorities set forth above, de-
clared: '. . . To this general rule there are excep-
tions. One of them is that, where the criminal in-
tent of the defendant is indispensable to the proof
of the offense, proof of his commission of other
like offenses at about the same time that he is
charged with the commission of the offense for
tvhich he is on trial, may be received to prove that
his act or acts were not innocent or mistaken, but
constitute an intentional violation of the law. In
cases falling under such an exception to the rule,
however, it is essential to the admissibility of evi-
dence of another distinct offense that the proof
of the latter offense be plain, clear and conclusive.
Evidence of a vague and uncertain character re-
garding such an alleged offense is never admis-
sible."
See also Marshall v. U. S., 197 F. 511 (2d), digested

at page 32 of the appendix of this brief. Also S)nitli

V. U. S., 10 F. (2d) 787 (C. C. A. 9th).

CONCLUSION

Since the organization of the Federal Judicial Sys-
tem, the United States Courts have applied the rule
that before a man may be taken from his family, de-
prived of his liberty and be branded "felon," he must
be fairly convicted upon legal evidence, and upon sub-
stantial evidence. We have attempted herein to show
that the large bulk of the evidence upon which this
appellant was tried, related to matters with which he
was admittedly not concerned, and which were not
mentioned in the indictment. The prosecuting officials

18

counter by stating, at page 25 of the answering brief,
that even if this was error, the error was not preju-
dicial. If that be true, and if the government did not
rely heavily upon the testimony covering the incident
in 1925 to convict this appellant, then why was so much
of the case devoted to it? This is not a fair, consistent
or frank position for counsel to assume.

As respects the testimony relating to Count 7, coun-
sel have not undertaken to suggest to the Court how
any of it was admissible, in the face of the Kulm and
Mayola cases of this circuit, cited at pp. 66-67 of appel-
lant's brief. The questions presented in the brief of
appellant, with nominal exception, were not extended
the courtesy of a passing glance.

We have contended throughout the case that the

record was and is devoid of substantial evidence. A

concise definition of "substantial evidence" is found

in the recent pronouncement of the 10th Circuit in the

following language:

"Because there is no substantial evidence of a
violation, the court should have directed a verdict
of acquittal. Some evidence has been presented,
but it is not substantial. The law requires moro
than merely 'some' evidence; it demands that the
verdict be based on substantial evidence or a con-
viction will not be jjcrmitted to stand. In this case
all the substantial evidence is as consistent with
innocence as with guilt." Towhin v. U. S., 98 F.
(2d) (C. C. A. 10) 861, 866.

Juries are not permitted in civil cases to speculate
on the negligence of a defendant. They should not be

19

permitted to guess at the guilt of a defendant in a
criminal case. Leslie v. U. S., 43 F.(2d) 288, 290 (10th) .

The evidence shows that the appellant was operat-
ing a pawnshop and a second-hand store. In making
loans upon articles pledged with him, he was, by the
very nature of the business, taking chances upon the
ownership of the articles so pledged. The police might
at any time reclaim the pledged article. In recognition
of this fact, the laws regulating such lines of business
allow high rates of interest to be charged. So it was
with the checks which the appellant would cash, not
only for Nelson and his ilk, but for other of his cus-
tomers. If the charge he made for this service was im-
conscionable, it was not more so than the rates of in-
terest pawn brokers are customarily allowed in their
business transactions. Nelson made many loans from
appellant, and from the fact that they were made from
time to time, it may be fairly inferred that Nelson
repaid the loans when due. He might have known that
Nelson was not in the clear, but aside from the incident
which occurred in 1925, the record shows nothing what-
soever that would lead him to such a conclusion.
Though he knew Nelson well, the latter had not only
failed to tell him, but had carefully concealed the
fraudulent scheme from him. Nelson testified:

"No, sir. I don't tliink I ever discussed it with
Mazurosky";

"I don't really think we ever did discuss it";

"I don't remember having any conversation with
him in that regard."

20

All of the frauds were perpetrated at points distant
from the state of Oregon. Appellant was admittedly
not sharing in the profits of the scheme. Of all the
frauds perpetrated by Nelson over the eleven-year pe-
riod, only two cheeks, both regular upon their face, were
turned over to appellant. These are in addition to the
Wagner check of 1925. Of the thousand frauds perpe-
trated by the Martin group, but two of the checks found
their way to the appellant. The remark about the
"suckers" was clearly in jest. The vernacular "sucker
lists" are not composed only of those who have been
bilked in fraudulent schemes, but include, likewise,
those who are oversold in legitimate business transac-
tions. Nelson was an admitted gambler.

The record does not show that appellant knew or
had basis for knowledge of what Nelson was doing, or
whether he was engaged in various lines of endeavor.
There is not the basis for an inference, after casting
aside the presumption of innocence which shelters ev-
ry defendant iuia criminal case, that appeUant knew
or had reason to suppose that the checks were obtained
in an illegal pursuit, and particularly in the fraudulent
schemes charged in the indictment. If it be stated that
this begs the whole question, then so be it. It is our
sincere conviction, on the merits and upon the testi-
mony received in the case.

Respectfully submitted,

EDWIN D. HICKS,
HICKS & ADAMS.

21

INDEX TO APPENDIX

Reply to Miscellaneous Statements and Infer-
ences Drawn from the Evidence .... 22

The Transmission of the Draft as Charged in
Comit 4 was not in Execution of the Fraud-
ulent Scheme 28

Quotation from State v. Wilson, on Oregon Rule
Governing Admissibility of Evidence of Other
Offenses 30

Digest of Marshall v. U. S., 197 P. 511 (2d) . . 32

Digest of Smith v. U. S., 10 P. (2) 787 (CCA 9) 33

22
APPENDIX

REPLY TO MISCELLANEOUS STATEMENTS

AND INFERENCES DRAWN FROM

THE EVIDENCE

(See this brief, page 1.)

In the answering brief, counsel for aj^peUee have
not questioned the accuracy of the summary of the
evidence presented in appellant's brief beginning on
page 7 and concluding on page 21 thereof. Statement
is made, however, that the smiimary is "inadequate,"
and pages 3 to 8 inclusive are devoted to a disclosure of
the particulars which counsel apparently feel warrant
this conclusion. The testimony referred to and the in-
ferences drawn therefrom will now be examined with
sj)ecific reference to the record so the Court may see
wherein the truth lies.

At page 4 of the brief we find this statement :

"To show that appellant had knowledge of the
unlawful means by which the co-schemer and con-
sjjirator, Frank Nelson, alias 'Slats,' obtained
checks from victims, made out to fictitious persons
and readily accejjted by ai)pellant Mazurosky,
though he at that time knew the true name of the
prior endorsees on the swindled check which is
Government Exhibit 7."

It is submitted that that is a gross misconstruction
of the record. Only on one occasion, and that was way
back in 1925, did the defendant learn that "Slats'*
Nelson was operating under an assumed name. When

23

Mr. Wagner identified the Dr. Pierce as the party who
had defrauded him, the defendant readily recognized
from a description given, that Nelson had perpetrated
the fraud under the assumed name. Nelson, thereupon,
gave complete and accurate descriptions of both Brown
and Nelson. (R. 70, 74, 75, 69.) As to the transactions
mentioned in the indictment, and shown in the record,
there is no evidence showing that the defendant knew
that either Nelson as the spear-head of one of the con-
spiracies, or Martin (R. E. Terrell), of the other, were
operating under fictitious names or that any other of
the co-actors were operating under assumed names.

The defendant knew Martin under the name of R.
E. Terrell and by no other name. He forwarded the two
checks to the defendant under the name R. E. Terrell,
and the defendant, without exception addressed Martin
as R. E. Terrell. (R. 95, 149, 150.) The two checks
(Mershon and Allen) were endorsed in blank and were
as freely negotiable as a five-dollar bill. There is no
evidence in the record to show that defendant knew
that the names H. J. Pierce and O. C. Stone, appear-
ing upon the Mershon check (R. 134), or that the name
H. J. Miles appearing on the Allen check (R. 135)
were fictitious names, or otherwise tlian endorsements
entirely regular. Martin (knowai to the defendant as
Terrell) had endorsed neither of the checks, nor was it
necessary that he do so. Checks endorsed in blank are
commonly negotiated without further endorsement.
The same situation is found in respect to the two checks

24

received by the defendant from Nelson in the Belter
and Diebert transactions. (R. 136-137.) Both checks
were endorsed in blank "J. C. Adams," and it was
never disclosed to the defendant that J. C. Adams was
the assumed name under which Londergan was oper-
ating. The record fails to show that the defendant was
acquainted with Londergan or with any other of the
conspirators aside from Nelson. Nelson specifically
testified that the defendant knew him only as Frank
"Slats" Nelson, and there is no confusion in the
record on that x>oint. Frank Nelson was the true
name of Nelson (R. 61), and the defendant knew him
by that name and no other. (R. 65, 50, 51.) As far as
the defendant knew, as shown by this record, the names
Stone, Adams et al. were entirely regular and nothing
has been found in the record to indicate a contrary
conclusion. The two checks turned over to the defen-
dant by Nelson were endorsed in blank and freely
negotiable without the requirement of an endorsement
by Nelson, and Nelson had endorsed neither. It is re-
spectfully submitted that the record fails to bear out
the inference drawn by counsel in the above quotation
from the answering brief.

At jjage 6 of appellee's brief it is stated that appc^l-
lant falsely stated to the detectives that the person from
whom he received the check was a doctor. The record
shows that this check was sent to the appellant by
Martin (kno^vn to appellant as R. E. Terrell), and
the record does not show that tliis party was not a

25

doctor. And the other three parties who were practic-
ing the eye fraud, to wit, Nelson, Brown, and Gray, all
were doctors of optometry, duly registered and quali-
fied as such. (R. 97, 62, 50.) Brown was known as Dr.
Brown, and optometrists are commonly styled as doc-
tors. Since all who were practicing the eye frauds
about whom we have specific information were opto-
metrists (doctors), the inference may be not unfairly
drawn that Terrell was likewise a doctor of optometry.
Counsel cannot fairly conclude from the record that
Terrell was not much.

Comisel also observe at this point that the officers
told the appellant that the check had been obtained in
a "bunco" game. The Court will observe from the
record that the appellant handled no more checks for
the Martin-Grray gang of conspirators after this infor-
mation was given him.

At page 8 of the brief, comisel construe the testi-
mony of the officers Powell and Williams (R. 77 to
80) as an admission by the appellant that he knew the
"details" of the fraudulent schemes. A glance at the
record will rebut this conclusion. What appellant told
the officers was that the party from whom he received
the check was known to him as "Slats", never as J. C.
Adams. Nelson at no time operated under the assumed
name of J. C. Adams. It was Londergan who used this
name, and it was Londergan who endorsed both of the
checks as "J. C. Adams." (R. 51, 59.) It is apparent
from these conversations that the appellent was iden-

26

tifying Nelson. What he did tell them was that Slats
"was" an eye specialist (an optometrist), and that
"he worked with Dr. Brown about sixteen years ago
in the eye specialist bmik as far as he knew" (R. 80),
all of which was true as shown by the record except that
it was ten years instead of sixteen years "ago." If
counsel mean by their conclusion that the defendant
thereby admitted that he knew Nelson was engaged in
the "eye bunk" business in 1925, then we agree with
the construction. But after that. Nelson had engaged
in the hotel business for about a year, had been in the
penitentiary a couple of times, had done some gam-
bling, and after all this had occurred it could not be
fairly inferred that because he was perpetrating a par-
ticular kind of fraud in 1925, he was up to the same
trick ten years later. The reasonable assumption would
be that after serving a term in tlie penitentiary for
this offense (Rockford, 111., 19:i0 R. 62) Nelson had
learned his lesson, and that the tlieory of retributive
justice, which forms the bulwark of our penal system,
had operated to cleanse him.

At page 6 of appellee's brief, counsel note an admis-
sion "against interest" in the testimony of Mr. Keller,
of the Western Union, upon the inquiry made by ap-
pellant concerning certain moneys transmitted by him
by telegraph in 1934 and 1935. The names of the parties
to whom the money was sent were not given, and there-
fore, nothing can be claimed for this testimony.

27

At page 8 of appellee's brief, counsel note that in
presenting the Belter check to the Bank of California,
the bank was instructed to "please hold for few days
if necessary." We have searched the record carefully
and can find no place therein where such an instruction
was given by appellant. The Belter check had already
gone to the bank once and had been returned. Under
such a circumstance it would be expected that the bank
in returning the check a second time, this time for col-
lection, would request that it be held. It is then observed
that Mr. Belter had told the "swindlers" that "the
check would be good in a few days," and from this it
is concluded that appellant was in communication with
the criminals and was informed by them that the check
would be good in a few days. This is a logical conclu-
sion, though not a necessary one as we have attempted
to show. We are, however, unable to conclude from this
that the appellant was thereby informed that the check
had been obtained in a fraudulent scheme. There is
nothing in the record to show that the appellant knew
Nelson to be a swindler in the eye racket in 1935. Nel-
son specifically testified, not once but several times, that
he had never informed the appellant of the fraudulent
scheme, and the forwarding of a bank check, regular
upon its face, with instructions to hold for a few days,
! would not impart the essential information.

, The remaining conclusions and the recitation of the
' testimony contained in the appellee's brief, have been

28

covered in our affirmative ])resentation in appellant's
opening brief. We shall not duplicate the effort here
except as need shall arise in answering specific argu-
ments contained in other portions of the brief.

The transmission of the draft, Exhibit 11, from the First National
Bank of Kennewick to the Bank of California, was not an act
in execution of the fraudulent scheme alleged in Count 4 of
the indictment.

(See this brief, pages 2, 3 inclusive.)

It was held by the 3rd Circuit in Newiufjham v.
U. S., 4 Fed. (2) 490 (C. C. A. 3), that after the victim
has parted with his money, the execution of the fraud-
ulent scheme is complete, and any acts done thereafter
in resi^ect to the transaction would not be in further-
ance of the scheme to defraud.

We have endeavored to show that the act of trans-
mitting the draft, Exhibit 11, by the First National
Bank of Kennewick to the Bank of California was an
independent banking transaction and that such act
could not in any sense be considered the act of the
defendant, (pp. 23 to 39 inch. Appellant's Br.)

It is submitted that the facts appearing in this rec-
ord do not come within the perview of the rule an-
nounced in Spear v. U. S., 246 Fed. 250 (C. C. A. 8)

and U. S. V. Kenofskey, 243 U. S. 440, 37 Sup. Ct. 438,
61 L. Ed. 836, which hold in effect that the transaction

29

is not completed upon receipt of the check; that the
act of forwarding the check for collection by the bank
is an act in furtherance of the scheme, with the bank
acting as agent for the accused.

Under the facts of this record, the collection had
been made and the victim had already parted with his
money before the draft, Exhibit 11, was transmitted
to the Bank of California. The business of collection
was at an end at the time the Kennewick Bank charged
the account of the drawer with the check. Jennings ef
al. V. United States Fidelity and Guaranty Company,
294 U. S. 216, 55 Sup. Ct. 394, 79 L. Ed. 869 (1935).
Any subsequent acts, even though connected with the
transaction in its broad outlines, would not be in fur-
therance of a scheme to defraud. The indictment
charges that the defendant, for the purpose of execut-
ing said scheme and artifice to defraud did unlawfully.
Knowingly, willfully and feloniously place and caused
to be placed in the United States mails at Kennewick
the draft mentioned in Count 4 of the indictment. It
is the contention of the defendant that the proof fails
to support this allegation of the indictment and that,
therefore, the conviction on this count must fail.

The doctrine to which reference is made has been

applied in the following cases :

McNearv. U. S., 60 F. (2) 861 (C. C. A. 10).
Stewart v. U. S., 119 F. 89, 95 (C. C. A. 8).
Banies v. U. S., 25 F. (2) 61 (C. C. A. 8).
Lonabaugh v. U. S., 179 F. 476, 481 (C. C. A. 8).
Merrill v. U. S., 95 F. (2) 669 (C. C. A. 9).

30

{See this brief, pages 12, 13.)

"The case of State v. O'Doymell, 36 Ore. 222
(61 Pac. 892), is a leading case in this state on the
subject in hand. It has been cited often and has
never been overruled. Here follows the statement
of Mr. Justice Moore, of the so-called exceptions:
" 'The rule that evidence of crimes other than
that charged in the indictment is inadmissible is
subject to a few exceptions, speaking of which
Mr. Underhill, in his valuable work on Criminal
Evidence (section 87) says: "These exceptions
are carefully limited and guarded by the courts,
and their number should not be increased." The
author gives five exceptions to such rule, which
may be siunmarized as follows: (1) If several
similar criminal acts are so connected by the
prisoner, with respect to time and locality, that
they form an inseparable transaction, and a com-
plete account of the offense charged in the indict-
ment cannot be given without detailing the par-
ticulars of such other acts, evidence of any or all
of the component parts thereof is admissible to
prove the whole general plan. . . Citing cases . . .
Mr. Justice Agnew in Shaffner v. Common-
ivealth, 72 Pa. St. 60 (13 Am. Rep. 649), in com-
menting upon this exception, says :"To make one
criminal act evidence of another, a comiection
between them must have existed in the mind of
the actor, linking them together for some pur-
pose he intended to accomplish." (2) When the
conmiission of the act charged in the indictment
is practically admitted by the i)risoner, who
seeks to avoid criminal responsibility therefor
by relying upon the lack of intent or want of
guilty knowledge, evidence of the conmiission
by him of similar independent offenses before
or after that upon which he is being tried, and
having no apparent connection therewith, is ad-

31

missible to prove such intent or knowledge,
which has become the material issue for trial. . .
Citing cases. . . Mr. Justice Rapallo, in People v.
CorUn, 56 N. Y. 563 (15 Am. Rep. 427), in
speaking of this exception, says: "The cases in
which offenses other than those charged in the
indictment may be proved, for the purpose of
showing guilty knowledge or intent, are very
few." (3) If the facts and circmnstances tend
to show that the prisoner committed an inde-
pendent dissimilar crime, to enable him to per-
petrate or to conceal an offense, such evidence is'
admissible against him upon an indictment
charging the auxiliary crime, when the intent
to perpetrate or conceal such offense furnished
the motive for committing the crime for which
he is put upon trial. . . Citing cases. . . When a
crime has been committed by the use of a novel
means or in a particular manner, evidence of
the defendant's commission of similar offenses
by th use of such means or in such manner is
admissible against him, as tending to prove the
identity of persons from the similarity of such
means, or the peculiarity of the manner adopted
by him. . . Citing cases. . . (5) When a prisoner
is charged with any form of illicit sexual inter-
course, evidence of the commission of similar
crimes by the same parties is admissible to prove
an inclination to commit the act for which the
accused is put upon his trial. . . Citing cases. . . "

32

{See page 17 of this brief.)

Marshall v. United States, 197 Fed. 511, 117
C. C. A. 65 (2d Cir.) :

"On the trial of an indictment for using the
mails to defraud in conducting the business of a
society named in the indictment and alleged to be
a fraudulent organization, the United States Cir-
cuit Court of Appeals for the Second Circuit held
that it was error to admit testimony showing that
the defendant was also at the same time conducting
another socity of precisely the same kind by iden-
tical methods, which society was not mentioned in
the indictment. The court said:

" 'It is urged that the testimony was admis-
sible upon the question of intent ; but it is diffi-
cult to perceive how the repetition of identical
facts can have any legitimate bearing upon this
question. If the evidence as to the Standard So-
ciety showed a fraudulent intent, the govern-
ment's case in that regard was established ; noth-
ing more was needed. If, on the other hand, it
failed to show fraudulent intent, how was the
omission supplied by duplicating the testimony
under a different name"? A lawful act does not
become unlawful because it is repeated. If an
act be shown to be illegal, it is enough. The pros-
ecutor may safely rest on such proof ; it doesn 't
add to its illegal character to show that it was
repeated. If the contention of the government
be correct, the acts of the defendant in relation
to the Banker's Company constitute an offense
under section 5480 and he had a right to rely
upon the rule that he would not be called upon
to answer accusations not found in the indict-
ment. It is impossible to say how much of this
evidence may be prejudiced the jury.' "

33

{See page 17 of this brief.)

Smith V. United States, 10 F. (2d) 787 (C. C.
A. 9tli) :

' ' The effect of the admission of the testimony so
complained of was to show or tend to show against
the accused the commission of crimes independent
of that for which he was on trial. With certain
exceptions not applicable here, it is the well-settled
rule that this cannot be done. Boyd v. United
States, 12 S. Ct. 292, 142 U. S. 450, 35 L. Ed. 1077 :
Newman v. United States, (C. C. A.) 289 F. 712.
In People v. Molineux, the court said : ' This rule,
so universally recognized and so firmly established
in all English-speaking lands, is rooted in that
jealous regard for the liberty of the individual
which has distinguished our jurisprudence from
all others, at least from the birth of Magna
Carta r

"The judgment is reversed, and the cause is re-
manded for a new trial. ' '

No. 8809

Oltrrmt (Hanvt of Ap^i^als

for tlje Nintlj (Etrrmt

JOE MAZUROSKY,

Appellant,
vs.

UNITED STATES OF AMERICA,

Appellee.

PETITION FOR REHEARING

UPON APPEAL FROM THE UNITED STATES DIS-
TRICT COURT FOR THE DISTRICT OF OREGON

CARL C. DONAUGH,

United States Attorney for

the District of Oregon.
J. MASON DILLARD,
M. B. STRAYER,

Assistant United States Attorneys <

for the District of Oregon. 'f EO 1 0 19^' 3

506 U. S. Court House, Portland, Ore.,
Attorneys for Appellee

EDWIN D. HICKS,
HICKS & ADAMS, OLfeSK

515 Pacific Building, Portland, Ore.,
Attorneys for Appellant.

FILED

PAULP.O'BRIEM,

SLASS-KROHN PRINTING CO

No. 8809

flitrrmt Olourt of Appeals

for tlje Ntntlj (Utrrutt

JOE MAZUROSKY,

Appellant,
vs.

UNITED STATES OF AMERICA,

Appellee.

PETITION FOR REHEARING

UPON APPEAL FROM THE UNITED STATES DIS-
TRICT COURT FOR THE DISTRICT OF OREGON

CARL C. DONAUGH,

United States Attorney for

the District of Oregon.
J. MASON DILLARD,
M. B. STRAYER,

Assistant United States Attorneys

for the District of Oregon.

506 U. S. Court House, Portland, Ore.,
Attorneys for Appellee

EDWIN D. HICKS,
HICKS & ADAMS,

515 Pacific Building, Portland, Ore.,
Attorneys for Appellant.

SLASS-KROHN PRINTING CO

INDEX

Page

Discussion of Point I 3

Discussion of Point II 9

Discussion of Point III 9

Points 9-10

Table of Authorities

11 Amer. Jurisprudence 571 10

Degnan vs. United States, 271 Fed. 293 10

Lempie vs. United States (S>th Circuit) 39 Fed.

(2) 19 10

United States vs. Kane, 23 Fed. 751 10

United States vs. Sweeney, 95 Fed. 451 10

Wilson vs. United States, 162 U. S. 613 10

No. 8809

in tlj? ISinitth BtnttB

(Hxvtmt Qlourt of Appeals

for ll|e Ntntlj (Etrrmt

JOE MAZUROSKY,

Appellant,
vs.

UNITED STATES OF AMERICA,

Appellee.

PETITION FOR REHEARING

UPON APPEAL FROM THE UNITED STATES DIS-
TRICT COURT FOR THE DISTRICT OF OREGON

COMES NOW the United States of America, through
Carl C Donaugh, United States Attorney for the District
of Oregon, and his Assistants, M. B. Strayer and J. Mason
Dillard, and respeafuUy petitions the court for a rehear-
ing. We are apprehensive that the Government, in its
brief, has not discussed in sufficient detail the evidence
pertaining to the two elements upon which the Court of
Appeals has reversed the decision of the trial court.

The case is one which, as revealed by the record, was
tried with extreme fairness under the supervision of the

trial judge. It will be noted from the record that before
retiring for its deliberations the jury received studiously
fair and comprehensive instruaions. The motion for a di-
rected verdia was carefully considered and denied.

The opinion of the Court of Appeals, if we interpret
it correctly, is based upon two principles. The first is
that with respea to Count Four of the indiament there is
insufficient evidence to reveal knowledge on the part of
the appellant, Mazurosky. The second is that with respea
to Counts Seven and Eight of the indiament the prosecu-
tion has failed to show in the evidence an intent by the
conspirators to use the United States Mail.

In support of this petition for re-hearing we respea-
fuUy submit three points for the consideration of the
Court:

I

It is the opinion of the court that the prosecution has
failed to show substantial evidence of knowledge. With
respea to this, we ask the court to consider the evidence
in greater detail.

II

There is substantial evidence of intent to use the mails
as applied to Counts Seven and Eight of the indiament.

Ill

There is substantial evidence in the record to support

the finding of the jury with respea to each necessary ele-

ARGUMENT

POINT I

Respeaing knowledge, appellee direas attention to
authorities submitted in its brief in this cause and submits
in addition thereto a more detailed discussion of the testi-
mony. First, we ask consideration of the Court of Ap-
peals of the undisputed faa that the appellant was fully
advised concerning the nature of the swindle engaged in
by his co-conspirators, as evidenced by the testimony of
the witness Wagner (Tr. p. 83) and further by the testi-
mony of the witness, John Goltz (Tr. pp. 73, 74), in
which the appellant stated to John Goltz, a police officer
of the city of Portland, that he knew "them fellows." It
is noted that one of "them fellows" to whom the defend-
ant referred was O. A. Plummer. Though there is no evi-
dence in the record on behalf of the appellant, the appel-
lant argued that this was an innocent transaaion. We
think this circumstance is inconsistent with innocence. By
his own admission the appellant received the check from a
person (Nelson) with whom he was acquainted, seeing
plainly that it was made out to a fictitious person, and
upon inquiry falsely stating that he knew O. A. Plummer.
Though the appellant, a business man, affixed his en-

4.

dorsement "]oe Mazurosky" to this check and went so far
as to threaten the maker thereof with aaion to collea the
same, and having known both of the operators of the
swindle, Nelson and Doaor Brown (Tr. p. 74, line 8),
appellant still contends a lack of knowledge. Appellant
professes to be a business man, yet he accepted a check,
prior to the offenses charged herein, the last endorsement
of which is "O. A. Plummet," which he knew was a fic-
titious name, and immediately thereafter not only an out-
raged victim of the fraud but a police deteaive of the City
of Portland interviewed him with respea to the same (Tr.
p. 74). The victim at that time informed the appellant in
detail concerning the method by which he was swindled.
Appellant therefore knew, as far back as 1925, that Nelson
was engaged in defrauding viaims by means of the "eye
racket" and his later conversations with Nelson, in which
he asked "How are the suckers, Slats?" are consistent with
knowledge on his part during all of the years of his ac-
quaintance with Nelson that Nelson was continuing in that
line of business.

The first transaaion which is the subject of this in-
dictment occurred in 1934. Not only had the appellant
been fully advised of the trick and swindle (Tr. p. 83),
but he had been on intimate terms with Nelson, a co-
swindler, as noted in the opinion of this court. But, in
December of 1934, having received the fruits of the crime,

5.

appellant was again advised that the fruits of the crime
were obtained "in a bunko game." (Tr. p. 104). In ad-
dition to that, the appellant made the statement, under all
of the circumstances of an interview by a police deteaive
of the Portland Police Bureau, that the party was a doaor
(Tr. p. 104, line 16).

This evidence reveals a studied attempt on the part of
the appellant to conceal the identity of the party from
whom he received the check. This concealment of the
identity of the bunco men was an integral part of the
scheme and essential to its success. It is submitted as evi-
dence to show knowledge and concealment.

The negotiable instrument then under discussion was
endorsed "H. J. Pierce," "O. C. Stone," "Joe Mazurosky"
(Govt. Ex. 1). It is apparent from the record that the
business man, Mazurosky, knew no "H. J. Pierce," knew
no "O. C. Stone," and the faa remains that he accepted
the check. Concerning that check, the appellant said he
didn't know the whereabouts of the party who gave the
check to him, which is further evidence of an attempt to
conceal the identity of the bunco men.

Thereafter many circumstances are revealed in the evi-
dence, undisputed, showing knowledge on the part of the
appellant. Some of these are as follows:

In 1935 the appellant told one of his co-conspirators,

6.

Nelson, that 10% commission for cashing the checks was
not enough; that the checks were "getting a little hot and
he would have to have more commission."

Communication between the appellant and Frank Nel-
son is revealed by the facts concerning the Belter check.
When received by the swindler, the maker. Belter, had no
funds in the bank and so informed Frank Nelson (Tr. 55).
When the check was presented at the bank by the appel-
lant, for a second time, instruaions were given to hold the
check for a few days, if necessary. While the evidence
does not disclose by whom these instruaions were given,
we are entitled to infer that they were given by the appel-
lant. This, we think, reveals that the appellant had com-
municated with Nelson and, having received the check
back once unpaid, presented it again with assurance that it
would be paid in the near future. Appellant could have
obtained this information from no other source than
through communication with Nelson.

Contrary to usual banking praaice, the check was sent
through "no protest" at the request of the appellant (Tr.
p. 110). This, we think, is not consistent with a good
faith business transaction, but is evidence from which the
jury might infer appellant had full knowledge that the
check was not supported by legal consideration and that
no legal action could be taken to collect the same if it was
not paid.

7.

An additional undisputed faa concerning the Belter
check is that the last endorser prior to the endorsement of
the appellant is "J- C. Adams." The appellant's co-con-
spirator, Nelson, sent this check to him by mail under his
true name of Nelson (Tr. p. 65, line 7). The same state
of faas applies to the Deibert check (Govt. Ex. 26) as
revealed by the testimony of Nelson (Tr. p. 60). In
other words, the appellant well knew that J. C. Adams,
payee of each of these checks, was a fiaitious person. In
addition, when interviewed by police officers seeking to
identify "Adams," the payee of the Deibert check, the ap-
pellant stated that he had known him for sixteen years,
but the appellant concealed the true identity of his co-
conspirator, Nelson, in 1934. Again we find the appel-
lant fulfilling his part in the scheme by concealing the
identity of the bunco men.

When the appellant was interviewed by Police Detec-
tive Powell regarding the Deibert check, he informed
Powell that "Adams" was an eye specialist (Tr .78), and
on the same occasion he stated to Police Detective Wil-
liams (Tr. 80) that "Adams" was known to him as "Slats"
and that he worked with Dr. Brown about sixteen years
ago in the "eye specialist bunk." His statement that "Ad-
ams" had come into the store and asked him to cash a
check was false. This evidence, we believe, is consistent
with no other theory but that of guilty knowledge upon

8.

his part that "Adams" was actually Frank Nelson and that
he was engaged in the eye specialist racket at that time.

The appellant received 15% commission for cashing
some of the checks (Tr. p. 90). We think that faa is not
consistent with the theory that the appellant engaged in a
good faith business transaaion.

Further, to show knowledge on the part of Joe Mazu-
rosky, the testimony of Herman Horack (Tr. p. 104) is
offered to the effea that in December, 1934, appellant
was informed by police officers of the City of Portland
that the Mershon check (Govt. Ex. 1) received from "O.
C. Stone," a fictitious person, was obtained in a bunco game.
The appellant's statements to police officers (Tr. p. 106)
concerning this check were false and concealing.

He communicated with another co-conspirator, Martin,
addressing him as R. E. Terrill, and himself using the
name of Morris (Tr. p. 130). He admitted to a United
States Post Office Inspector that he knew the checks were
obtained in some kind of a fraud (Tr. 132), and having
been repeatedly informed of the nature of that fraud, both
by police officers and by an outraged viaim, we submit
that there is evidence from which the jury might infer and
find complete knowledge, sufficient to support its verdia,
and all of these circumstances are inconsistent with inno-
cence.

POINT II

Respeaing the intent of the appellant and co-conspira-
tors to use the mails, which is concededly a necessary
element of proof to support the conspiracy counts of the
indiament, we submit that the best evidence thereof is
found in the faa that both the appellant and his co-con-
spirators did make direa use of the United States Mails
by personally depositing letters in the United States Mails.
(Tr. p. 50). Furthermore, appellant, being a business
man, transaaing business with three banks, certainly knew
the practice of banks with respect to using the mails in the
exchange of checks.

Again, in 1934, Joe Mazurosky specifically requested
that the United States National Bank of Portland send one
of the checks to Denver, Colorado, air mail (Tr. p. 120).
As late as 1935 he told another bank to send one of the
checks direa to the Kennewick, Washington, bank (Tr. p.
109). We offer these instances in conneaion with the
accepted rule that a man intends the ordinary consequences
of his act.

POINT III

We ask the consideration of the court of the follow-
ing general principles as applicable to the instant case:

(1 ) The jurors are the judges of the weight of the tes-

10.

timony and their verdict will not be disturbed unless it be
out of reason.

Lempie vs. United States (9th Circuit), 39 Fed.
(2) 19.

(2) The question of intent with which an aa is done
is solely one for the jury.

11 Amer. Jurisprudence 571.

(3) A conspiracy having been formed, each of the
conspirators is liable for the unlawful aa of one done in
furtherance of it, though he is not familiar with the details
of the particular unlawful aa at the time it is committed.

United States vs. Sweeney, 95 Fed. 451.
United States vs. Kane, 23 Fed. 751.

(4) Possession of the fruits of a crime immediately
or soon after its commission is in itself substantial evi-
dence to support a verdia.

Wilson vs. United States, 162 U. S. 613.
Degnan vs. United States, 271 Fed. 293.

CONCLUSION

Applying the foregoing rules to the faas in this case,
we believe there is ample evidence to justify the finding of
the jury that the appellant had full knowledge of the
method by which the various checks were obtained. But

11.

even if he did not have complete know^ledge of this meth-
od, he certainly knew that the checks had been obtained
by means of a fraudulent scheme and possessing such
knowledge he aided in the execution of that scheme. It
is our understanding of the law that this evidence is ample
to render him guilty of the crime charged.

A rehearing in this cause is respectfully and earnestly
petitioned in the interest of justice.

RespeafuUy submitted,

Carl C. Donaugh,
United States Attorney for
the Distria of Oregon.

J. Mason Dillard,

Assistant United States Attorney,

M. B. Strayer,

Assistant United States Attorney,
Attorneys for Appellee.

12.

CERTIFICATE OF COUNSEL

I hereby certify that I am one of the attorneys for appelle,
United States of America, and that in my judgment the fore-|
going petition for a rehearing is well founded in point of |
law as well as in f aa and that said petition for rehearing is I
not interposed for delay.

J. Mason Dillard,

Assistant United States Attorney.!

f

No. 8812

Winitth States

Circuit Court of Appeals!

Jfor tfie JSintfi Circuit,

DAISY S. KOHLER,

Appellant,

vs.

YEOMAN MUTUAL LIFE INSURANCE
COMPANY and CLARA KOHLER,

Appellees.

transcript of Eecorb

Upon Appeal from the District Court of the United States
for the District of Montana.

FILED

PARKER PRINTING COMPANY. 545 SANSOME STREET. SAN FRANCISCO

No. 8812

^ntteb States!

Circuit Court of Appeals!

Jfor tfje Mintl) Circuit.

DAISY S. KOHLER,

Appellant,

vs.

YEOMAN MUTUAL LIFE INSURANCE
COMPANY and CLARA KOHLER,

Appellees.

l^rauHcript of Eecorb

Upon Appeal from the District Court of the United States
for the District of Montana.

PARKER PRINTING COMPANY. 545 SANSOME STREET. SAN FRANCISCO

INDEX

[Clerk's Note: When deemed likely to be of an important nature,
errors or doubtful matters appearing in the original certified record are
printed literally in italic: and. likewise, cancelled matter appearing in
the original certified record is printed and cancelled herein accordingly.
When possible, an omission from the text is indicated by printing in
italic the two words between which the omission seems to occur.]

Page

Allowance of Appeal 104

Assignment of Errors 100

Attorneys, Names and Addresses 1

Bond on Appeal 104

Caption 2

Citation 106

Clerk's Certificate to Transcript of Record 147

Decree 97

Findings of Fact, Conclusions of Law and
Order 2

Order Denying Motion to Dismiss Appeal 149

Order of Circuit Court of Appeals Extending
Time to File Transcript 145

Petition for Appeal 103

Praecipe for Transcript 143

Praecipe for Transcript (second) 146

Stipulation in re Substitutions and Additions
to Proposed Statement of Evidence 142

ii Daisy S. Kohler vs.

Index Page
Testimony _ 108

Exhibits for Defendants:
2 — I.etter dated January 17 to J. Victor
Kohler from Clara Kohler 113

3— Letter dated March 7, 1931 to Mrs.
Daisy S. Kohler from P. G. Schroeder... 116

4— Letter dated April 7, 1931 to P. G.
Schroeder from Daisy S. Kohler 119

5— Letter dated March 10, 1931 to P. G.
Schroeder from Daisy S. Kohler 117

6— Letter dated March 24, 1931 to Daisy S.
Kohler from P. G. Schroeder 118

8 — Letter dated November 17, 1933 to Nu-
zum and Nnzum signed Ass't to General
Counsel 124

9— Bill of Sale dated September 9, 1930
signed by Daisy Kohler 128

Witnesses for Defendants:
Kohler, Mrs. Daisy S.

—direct : _ 1 10

— cross 114

— redirect ~ _ 1 22

— rebuttal 136

Witnesses for Plaintiff:
Ford, Mr. S. C.

—direct 108

Kohler, Mrs. Clara

— direct 1 25

— cross 126

Yoemen3Iut.LifeIns.Co.,etal. iii

Index Page

Witnesses for Plaintiff (cont.) :
Schroeder, Philip

—direct 130

— cross 133

Smith, Paul W.

—direct 137

Spaulding, C. A.

— direct _ 110

Toomey, E. G.

— direct 110

NAMES AND ADDRESSES OF ATTORNEYS
OF RECORD.

WELLINGTON D. RANKIN and
ARTHUR P. ACHER,

both of Helena, Montana, and
H. W. PITKEN and
J. G. BOWES,

both of Des Moines, Iowa,

Attorneys for Plaintiff and Appellee.

PAUL W. SMITH and
DAVID R. SMITH,

both of Helena, Montana,

Attorneys for Defendant and Appellee,
Mrs. Clara Kohler.

T. H. MACDONALD,

of Helena, Montana,

Attorney for Defendant and Appellant,
Mrs. Daisy S. Kohler. [1*]

Be it remembered that on June 15, 1937, Find-
ings of Fact, Conclusions of Law and Order was
duly filed herein, being in the words and figures
as follows, to-wit: [2]

•Page numbering appearing at the foot of page of original certified
Tranecript of Record.

2 Daisy S. Kohler vs.

District Court of the United States District of
Montana, Helena Division.

YEOMEN MUTUAL LIFE INSURANCE COM-
PANY, formerly Brotherhood of American
Yeomen, a corporation, Des Moines, Iowa,

Plaintiff,
vs.

MRS. CLARA KOHLER, 3 North Main Street,
Helena, Montana, and MRS. DAISY S.
KOHLER, 501 O. & B. Building, Spokane,
Washington,

Defendants.

FINDINGS OF FACT, CONCLUSIONS OF
LAW AND ORDER.

This suit in equity was begun by a Bill of Inter-
pleader, duly verified, filed pursuant to the pro-
visions of the Act of May 8, 1926, c. 273, Sees. 1-3,
44 Stat. 416; 28 U. S. C. Sec. 41 (26).

In its Bill of Interpleader the plaintiff alleges:
"That the plaintiff, the Yeomen Mutual Life In-
surance Company, formerly Brotherhood of Ameri-
can Yeoman, is and at all times mentioned herein
has been, a corporation duly incorporated, existins:
and doing business under the laws of the State of
Iowa; that on May 1, 1932, the Brotherhood of
American Yeomen was transformed from a fra-
ternal beneficiary society to a mutual, level pre-
mium, life insurance company and the name was
changed to the Yeomen Mutual Life Insurance Com-
pany, said transformation being made under the

YoemenMut.Lif6lns.Co.,etal. 3

laws of the State of Iowa, Sections 8861 to 8893 of
said statutes of the State of Iowa ; that said statutes
provide that a fraternal beneficiary society may so
transform but as to its members at the time of trans-
formation, it shall be a con- [3] tinuation of the ori-
ginal corporation. Section 8882 reading:

'Such amendment or reincorporation shall
not affect existing suits, claims or contracts.'

Tliat by virtue of the above sections of the statute,
the insurance in force prior to May 1, 1932, shall be
and is governed by the Constitution and By-Laws of
the Brotherhood of American Yeoman then in force
on said date, to-wit : May 1, 1932 ; that the principal
place of business of said corporation is in Des
Moines, in the State of Iowa, and said company is a
citizen of the State of Iowa; that the defendant,
Clara Kohler, is a citizen of and resides in the State
of Montana within the territorial jurisdiction of this
court ; that the defendant, Daisy S. Kohler, is a resi-
dent and citizen of the State of Washington.

"That the plaintiff as a fraternal beneficiary so-
ciety issued a certain certificate of insurance, under
the terms and conditions of which it provided for
the payment of more than $500.00 as benefits to a
designated beneficiary; that two adverse claimants,
citizens of different states, one of whom resides
within the territorial jurisdiction of this court, are
claiming to be entitled to such insurance or bene-
fits.

"That on or about the 26th day of July, 1923, the
plaintiff company issued to one James Victor Koh-
ler its certificate of insurance No. 177490 providing

4 Daisy S. Kohler vs.

for death benefits in the sum of $2,000.00, wherein
Daisy S. Kohler, wife of the insured, was named
beneficiary. Copy of said certificate is hereto at-
tached, marked Exhibit '*A" and made a part
hereof. That on or about the 26th day of August,
3931, the insured in said certificate, to- wit: the said
James Victor Kohler, requested that a change be
made in the beneficiary named in said certificate
and signed an application known and designated
as 'Application for Change of Beneficiary' request-
ing that the beneficiary be changed from Daisy S.
Kohler, wife, to Clara Kohler, wife, and delivered
the [4] said application to plaintiff company. That
the said application for Change of Beneficiary was
received by this company at its home office on or
about the 31st day of August, 1931, and a photo-
static copy of said Application for Change of Bene-
ficiary is hereto attached, marked Exhibit "B" and
made a paii; hereof. That the said James Victor
Kohler failed to submit his certificate of insurance
with the aforesaid Application for Change of Bene-
ficiary, ])ut thereafter on March 5, 1932 completed a
blank known and designated as 'Application foi'
Duplicate Benefit Certificate imder Section 115, By-
Laws 1929, and Waiver', which is hereto attached,
marked Exhibit "C" and made a part hereof, statini^
that said certificate was out of his possession and he
was unable to secure tJie same. Said Section 115 of
the 1929 By-Laws reads as follows:

'In case a benefit certificate is lost or de-
stroyed or otherwise out of the possession or
control of the member insured a new certificate

YomnenMid. Lifeltis. Co.,etal. 5

may be issued upon the filing of a sworn state-
ment and written request by the member with
the Secretary w^ho shall thereupon issue a dupli-
cate certificate, provided the explanation con-
tained in the sworn statement is satisfactory to
the Secretary. The Secretary will furnish on
request a proper form for said request and affi-
davit. '

That in compliance with said request for change
of beneficiary and application for duplicate certifi-
cate, the plaintiff issued a duplicate certificate of
membership to the said James Victor Kohler bear-
ing the same number 177490, which certificate pro-
vided for the payment of death benefits in the sum
of $2,000.00 and in which certificate it was provided
that all payments or benefits that accrue or become
due by virtue of said certificate shall be payable to
Clara Kohler, wife, or in accordance with the laws
of this company. That the said Certificate provides
among other things, the following:

'It is agreed by the member holding this cer-
tificate that the certificate, the charter or
Articles of Incorporation, the By-Laws of the
Association, the application for membership and
the medical examination [5] signed by the ap-
plicant, with all amendments to each thereof,
shall constitute the agreement between the As-
sociation and the member, and any changes, ad-
ditions or amendments to said charter or
Articles, of Incorporation and By-Laws of the
Association enacted subsequent to the issuance
of this certificate shall be binding upon the

6 DaAsy S. Kohler vs.

member and his beneficiary or beneficiaries and
shall govern and control the agreement in all
respects in the same manner as if such changes,
additions or amendments had been made prior
to and were in force at the time of the applica-
tion for membership.'

That at this time the defendant, Mrs. Daisy S. Koh-
ler, holds one certificate and Mrs. Clara Kohler
holds a duplicate certificate.

''That the said insured, James Victor Kohler,
died on or about the 9th day of May, 1933 ; that by
reason of the death of the said James Victor Kohler
the plaintiff has become indebted mider the said cer-
tificate of insurance to such person or persons as
may be entitled to be paid the proceeds of the same
in accordance with the terms thereof and in accord-
ance with the provisions of the Constitution and
By-Laws of t»he Brotherhood of American Yeomen
in force and governing.

"That at the time of the change of beneficiary as
hereinbefore set forth in Paragraph III and con-
tinuing until the filing of this Bill of Interpleader,
there was and there still is in full force and effect
the following provisions of the Constitaition and By-
Laws of the plaintiff company as to certificate? is-
sued prior to May 1, 1932 :

'Sec. 113. Should any member in good stand-
ing desire to change his beneficiary or bene-
ficiaries, he may do so by returning his certifi-
cate to the Local Secretary of his Homestead,
togetjier with his \\Titten request endorsed

Yoemen Mut. Ldfe his. Co.,etal. 7

thereon for the proposed change, giving the
name of the desired beneficiary or beneficiaries,
together with their relation to the member. Said
request shall be sent to the Secretary, and the
Secretary shall endorse on said certificate said
change and return said certificate to the said
member.

'Sec. 114. If for any cause a beneficiary
named in the certificate is barred by law from
receiving the benefits provided for in said cer-
tificate or in case the member makes his spouse
the beneficiary in his certificate and said mem-
ber and his spouse are divorced, or legally
separated by order of a court of competent
jurisdiction before the death of the member,
and said member makes no other disposition of
the benefits, then the benefits which said [6]
barred beneficiary would have taken, had he not
been barred, or which the surviving spouse
would have taken but for said divorce or order
of separation, shall be paid to the person or
persons who would have been entitled to receive
the same if the beneficiary barred or divorced
or spouse separated by order of court, as the
case may be, had pre-deceased the insured and
the insured had named no other beneficiary.

'Provided, however, that payment of the bene-
fits to the beneficiary designated in a certificate
shall relieve the association from all liability
under said certificate unless prior to the date
of said payment the Secretary of the Associa-
tion shall have received notice in writing that,

8 Daisy S. Koh lev vs.

the designated beneficiary is barred by law from
receiving said benefits or was divorced or
legally separated from the member at the time
of the death of the member.'

**That the defendant, Clara Kohler, claims to be
the wife of said James Victor Kohler, deceased, and
claims to be entitled to the proceeds of said benefit
certificate in this company as the beneficiary named
in the hereinbefore mentioned certificat»e of member-
ship dated July 26, 1923, being Exhibit '^A" hereto
attached. That the defendant, Daisy S. Kohler,
claims to be the former wife of said James Victor
Kohler, deceased, and claims to be entitled to tihe
proceeds of said insurance by reason of a legal
agreement or assignment or property settlement
entered into at the time James Victor Kohler and
Daisy S. Kohler were divorced and now on file with
the Court in Helena, Montana. In this connection,
plaintiff alleges that long after the death of the
insured, plaintiff learned that on February 20, 1929,
a decree of divorce was duly entered in the District
Court of the First Judicial District of the State of
Montana, in and for the County of Lewis and Clark,
dissolving the marriage of said James Victor Koh-
ler and said Daisy S. Kohler, wherein an alleged
settlement agreement between the said parties is
alleged to have been entered into. That on file in
said cause is a purported copy of an alleged settle-
ment agreement between said parties, providing,
among other things, that said James Victor Kohler
would pay the premiums on the policy of insurance

YoemenMut. Life Ins. Co.,ctal. 9

herein iiiA-olved, thereaft,er to become due and that
said Daisy S. Kohler would remain the beneficiary
thereof. That Plaintiff was without [7] knowledge
of the aforesaid alleged settlement agreement until
long after the aforesaid certificate became due and
payable; that it now appears that said James Vic-
tor Kohler, by his own acts and conduct, attempted
to give said Daisy S. Kohler an absolute vested in-
terest in the aforesaid policy of insurance and there-
after purported to designate tjie said Clara Kohler
as his beneficiary. That at this time the defendant,
Daisy S. Kohler, holds the original certificate and
Clara Kohler holds a duplicate certificate ; that both
of said claimants insist that said policy of insurance
be paid to them and have threatened to file suit
against the plaintiff thereon; that plaintiff respect-
fully represents that it should not be obliged to in-
cur the expense necessary to conduct litigation in-
cident to determining the legality of the respective
rights of said claimants, particularly since each
claimant was given color of right by the insured
himself in his lifetime mthout the knowledge of
plaintiff.

''That the plaintiff has and claims no interest in
the subject matter of tjae contention, to-wit : the said
sum of $2,000, being the amount payable out of the
proceeds of said insurance; that the plaintiff has
incurred no independent liability to any of the
parties hereto and does not in any respect collude
with any of the defendants but is perfectly indif-
ferent between them, being in the position of a

10 Daisy S. Kohler vs.

mere stakeholder; that the plaintiff does not ask
any relief herein at, the request of either of said
defendants but asks relief solely of its own free wall
to avoid being molested and injured touching the
matters herein set forth.

''That due proof of the death of said insured was
received by plaintiff on the 22nd day of May, 1933,
from Mrs. Daisy S. Kohler; that thereafter due
proof of the death of said insured was received from
Clara Kohler on the 24th day of May, 1933. That
thereafter plaintiff attempted by correspondence
with attorneys for the said claimants to have them
determine between themselves their respective [8]
rights to said certificate of insurance; that it was
not until in the latter part of November, 1933, that
the plaintiff w^as informed by said attorneys that
there was no possibility of the parties interested
being brought to some agreement in regard to how
the proceeds should be paid, and it now appearing
impossible to do so, the plaintiff files this Bill of
Interpleader with reasonable diligence after having
become satisfied that the rights of said claimants
can only be determined by suit.

"That the plaintiff is uniformed and uncertain
as to the respective rights of said defendants and
cannot determine without hazard to itself to which
of said defendants the money due upon and under
the said certificate of insurance rightfully belongs;
that the plaintiff is in doubt as to which of the said
defendants is right in their respective claims and
has no means of satisfactorily ascertaining what are
the facts which are relied upon ])y said defendants

YoenienMut.LifeIns.Co.,etal. 11

as to their valuation for the respective claims ; that
the plaintiff cannot pay over the money due under
said certificate to either of the defendants without
taking upon itself the responsibility dt determining
doubtful questions of law and fact and without in-
curring the risk of being subjected to great* cost and
expense in defending itself and to a multiple pay-
ment of said indebtedness if it should finally appear
that plaintiff had wrongfully determined in favor
of either claimant at the expense of the other and
without being involved in a multiplicity of suits.

'^That the plaintiff has paid the amount due un-
der said certificate of insurance, to-wit : the sum of
$2,000.00, into the registry of this court, there to
abide the judgment of this court to be made and
entered thereunder. ' '
and,
Prays: [9]

'^That the defendants and each of them may be
ordered and decreed to interplead and settle be-
tween themselves their right or claim to the money
due under such certificate of insurance.

'^That the defendants and each of them be re-
strained by preliminary order and injunction from
instituting or prosecuting any suit or proceeding in
any state court or in any other Federal Court on
accoimt of said money or said certificate of insur-
ance, or any other matters hereinabove stated, and
that in due course such order and injunction may
be made permanent.

''That this honorable court shall issue its process
for the defendants, to-wit: Clara Kohler and Daisy

12 Daisy S. KoJiler vs.

S. Kobler, directed to the marshals of the various
District Courts of the United States in which the
said defendants respectively reside or may be found,
which process^Shall be returnable upon a day certain
at such time as this honorable court shall determine.

''That this plaintiff may be allowed a sum for its
reasonable expense and attorney's fees in connection
with this action in such amount as the court may
deem just and proper together with its costs.

''That the plaintiff may be released from further
liability on account of said certificate of insurance.

"That the plaintiff may have such other and fur-
ther relief as may be equitable in the premises."

So far as it is matierial here, Exhibit "A" at-
tached to said Bill of Interpleader is as follows:

"This certificate is issued in exchange for a Form
'A' certificate whole life certificate.

Age 44 Amount $2000

The Brotherhood of

(emblem)

American Yeomen

Des Moines, Iowa [10]

This Benefit Certificate issued by The Brother-
hood of American Yeomen, Witnesseth: That
Archer, James Victor Kohler, of Helena, Montana,
a member of Homestead No. 546 of The Brother-
hood of American Yeomen located at Helena, Mon-
tana is entitled to the follomng benefits and privi-
leges :

YoemenMiit.Lifelns. Co.,etal. 13

Death Benefit:

WitMn 90 days after the receipt of satisfactory
proof of the death of the above named member, The
Brotherhood of American Yeomen will pay to
Daisy S. Kohler, Beneficiary changed, request at-
tached, bearing the relationship of mfe, the sum of
Two Thousand Dollars.

Additional Indemnity for Accidental Death :

In the event and upon satisfactory proof that the
death of the member named above was solely and
proximately caused by external, bodily, accidental
injury, exclusively and independently of all other
causes; that such death occurred, within 90 days
after such injury and before said member had at-
tained the age of 65 years, wdthin the time said
member w^as paying the payments provided for on
the back of this certificate, while this certificate was
in full force under its original conditions and be-
fore the default of any payments, monthly or other-
wise, and providing such injury was received
while being transported as a passenger in a regu-
larly licensed common carrier, operated by steam or
electricity for the transportation of passengers,
then The Brotherhood of American Yeomen will
pay the beneficiary of said member, double the
amount named above, or. Four Thousand Dollars.

DEPOSIT OF RESERVES.

The Brotherhood of American Yeomen agrees to
maintain with the Insurance Commissioner of the
State of Iowa, the accumulations necessary to pro-

14 Daisy S. Kohler vs.

vide the benefits promised by this certificate, such
accumulations being the usual reserves computed by
the American Experience Table of Mortality and
four percent interest.
W. E. DANY, GEO. N. FRINK,

Secretary. President.

Fraternal Beneficial Association. [11]
The Brotherhood of American Yeomen is a fra-
ternal beneficial association, organized and existing
under and by virtue of the laws of the State of
Iowa, and is lawfully admittied to transact and is
transacting its business in the state wherein the said
member is domiciled and this certificate is delivered,
and the provisions of this certificate are in confoi^-
mity with the laws of the State of Iowa and with the
By-Laws of The Brotherhood of American Yeomen.

Agreement.
It is agreed by the member holding this certificate
that the certificate, the Charter or Articles of In-
corporatiion, the By-Laws of the Association and the
application for membership, and the medical exami-
nation, signed by the applicant, with all amend-
ments to each thereof, shall constitute the agreement
between the Association and the member; and any
changes, additions or amendments to said Charter
or Articles of Incorporation and By-Laws of the
Association enacted subsequent to the issuance of
this certificate shall be binding upon the member
and his beneficiary, or beneficiaries, and shall govern
and control the agreement in all respects in the

YoemenMut,LifeIns.Co.,etal. 15

same manner as if such changes, additions or
amendments had been made prior to and were in
force at the time of the application for membership.

In Witness AVhereof, The Brotherhood of Ameri-
can Yeomen has b}^ its President, attested by its
Secretary, signed and caused the corporate seal of
the said Association to be affixed to this contract at
the city of Des Moines, in the State of Iowa, U. S.
A., this 26th day of July, A. D. 1923.

GEO. N. FRINK,

President."

Attest:

[Seal] W. E. DANY,

Secretary.

Attached to said Exhibit ''A" are an '' Applica-
tion for Change of Beneficiary"; and, an "Applica-
tion for Duplicate Benefit Certificate under Sec-
tions 115, By-Laws 1929 and Waiver" which are in
words and figures as follows:

''The Brotherhood of American Yeomen.

APPLICATION FOR CHANGE OF
BENEFICIARY.

To the Brotherhood of American Yeomen :

You are hereby notified that I, the undersigned,
an insured member of said Association in Home-
stead No. 546, State of Montana, to whom was is-
sued Benefit Certificate No. 177490, dated the 26th
day of July, A. P. 1923, wherein Daisy S. Kohler
was designated as beneficiary, do hereby revoke said
designation of beneficiary and surrender said certifi-
cate for cancellation ; and that I hereby appoint the

16 Daisy S. KohJer vs.

following named person as my beneficiar ,

and request that you acknowledge said change. [12]
Name — Clara Kohler.
Age— 32.

Amount— $2000.00.
Relationship — Wife.
Address — Helena, Mont.

JAS. Y. KOHLER,
Genuine Signature of Applicant.

Signed in the presence of :
MRS. DAVID GEHRINa
MRS. LEONARD M. MICHELS

State of Montana, County of Lewis & Clark, ss.
On this 26th day of August A. D. 1931, before me
personally appeared Jas. V. Kohler io me known to
be the person described in and who executed the
foregoing instrument, and acknowledged that he exe-
cuted the same as his free act and deed.

[Notarial Seal] (Name Unreadable]

Notary Public in and for said County and State.

M}^ commission expires Nov. 14, 1933"

Change Acknowledged 3-11-32.

GEO. F. WALL,

Secretary.

YomnenMut.LtfeIm.Co.,etal. 17

''The Brotherhood of American Yeomen

Application for Duplicate Benefit Certificate Under
Section 115 By-Laws 1929, and Waiver.

To The Brotherhood of American Yeomen,
Des Moines, Iowa.

I, James Victor Kohler, hereby advise the
Brotherhood of American Yeomen of Bes Moines,
Iowa, that Benefit Certificate No. 177490 issued on
mv life, is out of my possession and control. The
reason therefor is as follows: Out of Possession —
Unable to Secure. I desire said Association to issue
to me a Benefit Certificate marked ''Duplicate"
bearing the same date and number, and in the same
amount as the above named Benefit Certificate.

In consideration of the issuance by the said Yeo-
men of the duplicate Benefit Certificate herein re-
quested, I hereby release said Association from any
and all liability of every nature and sort, either to
me or any beneficiary therein named, arising under,
out of or by virtue of the issuance of the said Bene-
fit Certificate now [13] out of my possession and
control.

I hereby certify that I am in good standing in
Homestead No. 546, located at Helena, Stat<e of
Montana.

Dated this 5 day of March 1932, at Helena,
State Mont.

JAMES VICTOR KOHLER,
(Sign name in full)

18 Daisy S. KoJiIer vs.

Subscribed and sworn to before me by the above
named James Victor Koliler this 5 day of March,
A. D. 1932.

JOSEPH W. (^HIVERS,
Notary Public in and for the Coimt.y of T.ewis &
Clark, State Mont.
Commission expires Sept. 9, 1933."

By her verified answer filed herein the Defendant,
Daisy S. Kohler, admits the allegations of the Bill
of Interpleader herein and that plaintiff is entitled
to the relief prayed for therein excepting that de-
manded in paragraphs 4 and 5 of the prayer wherein
plaintiff prays for an allowance of attorney's fees
and a release from further liability on account of
the certificate of insurance described in the Bill of
Interpleader and by way of defense thereto alleges
that there is due, owing and unpaid on said certifi-
cate of insurance interest at the rate of eight per
cent per annum from May 9, 1933, up to the time of
the deposit of said amount of $2,000 in this court.

By her verified answer filed here in the Defend-
ant, Clara Kohler, admits:

L That the principal place of business of the
plaintiff corporation is in the City of Des Moines,
in the State of Iowa, and that the said plaintiff is a
citizen of the State of Iowa ; that the Defendant,
Clara Kohler, is a citizen of and resides in the
State of Montana, within the territorial jurisdiction
of this court; and, that the Defendant, Daisy S.

I

YoemenMut.LifeIns.Co.,etal. 19

Kohler is a citizen and resident of the State of
Washington ; and as to all other allegations set forth
in said Bill of Interpleader ''alleges that she has
no knowledge or information thereof sufficient to
form a belief and therefore denies the same ; ' ' [14]

2. That the plaintiff as a fraternal beneficiary
society issued a certain certificate of insurance un-
der the terms and conditions of which it provided
for the payment of more than $5Q0 as benefits to a
designated beneficiary; that she "claims such in-
surance or benefits and that she resides within the
territorial jurisdiction of this court;" and, "denies
each and every other allegation set forth in" para-
graph 2 of said Bill of Interpleader;

3. Admits the allegations set forth in paragraphs
3, 4, 7 and 10 of said Bill of Interpleader ; alleges
that as to paragraphs 5 and 9 of said Bill of Inter-
pleader she has "no knowledge or information
thereof sufficient to form a belief and therefore
denies the same;"

4. As to the allegations of paragraph 6 of said
Bill of Interpleader she admits that she claims to
be and alleges that she is the wife of James Victor
Kohler; that she claims to be entitled to the pro-
ceeds of said benefit certificate as the beneficiary in
said certificate of membership, dated July 26, 1923,
being Exhibit "A" to said Bill of Interpleader;
that on February 20, 1929, a decree of divorce was
duly given or made in the District Court of the
First Judicial District of the State of Montaua, in

20 Daisy S. KoJiler vs.

and for the County of Lewis & Clark, dissolving
the marriage of said James Victor Kohler and said
Daisy S. Kohler; that she holds a duplicate cer-
tificate, and claims that said policy of insurance
should be paid to her and has threatened to file suit
against the plaintiff herein; and, "denies each and
every other allegation set forth in said paragraph 6
of said Bill of Interpleader; and,

5. "Denies each and all allegations of said Bill
of Interpleader not so specifically admitted or
denied,"

Further Answer and Cross Complaint of the
Defendant Daisy S. Kohler.

"By way of further answer and cross complaint
against the defendant Mrs. Clara Kohler'' the de-
fendant Daisy S. Kohler alleges; and defendant
Clara Kohler admits: [15]

1. That for a valuable consideration plaintiff is-
sued to James Victor Kohler its certificate of in-
surance No. 177490 as described in paragraph 3 of
the Bill of Interpleader; and, that a true and cor-
rect copy of said certificate of insurance appears
as Exhibit "A" of the Bill of Interpleader;

2. That on the date of the issuance of said cer-
tificate of insurance, to-wit: on the 26th day of
July, 1923, Daisy S. Kohler was the wife of James
Victor Kohler and that she continued to be the wife
of said James Victor Kohler up to tlie 20th day of
February, 1929, on which date the bonds of matri-
mony existing between the said James Victor

YoemenMut. Life his. Co.,etal. 21

Koliler and said Daisy S. Kohler were dissolved by
the decree of the District Court of the First Ju-
dicial District of the State of Montana, in and for
the County of Lewis & Clark, which was and is a
court of general jurisdiction and which said decree
was duly given and made; and, that a true and
correct copy of said decree is attached to said cross
complaint, marked Exhibit "A"; and

3. That said James Victor Kohler died on the
9th day of May, 1933.

The defendant Daisy S. Kohler therein also al-
leges, but the defendant Clara Kohler denies:

1. That said certificate of insurance No. 177490,
a copy of which is attached as Exhibit '^A" to the
Bill of Interpleader herein, provides "for the pay-
ment by the plaintiff to the defendant Daisy S.
Kohler of the sum of $2000 in the event of the death
of the said James Victor Kohler;

2. That at the time of the issuance of said cer-
tificate of insurance, to-wit: July 28, 1923, the de-
fendant, Daisy S. Kohler was a person dependent on
the said James Victor Kohler and continued to be
such person dependent upon him until his death on
May 9, 1933 ;

3. That said decree of divorce has not been re-
voked, modified, or changed and the same was in
full force and effect at the time of the death of said
James Victor Kohler; [16]

4. That at the time of said decree of divorce the
parties thereto entered into a contract and agree-
ment, a memorandmn of which was made in writ-

22 Daisy S. Kohler vs.

ing, signed by the pai-ties thereto, and approved
in said decree of divorce, and filed in said cause and
which agreement was in full force and effect on the
ninth day of May, 1933;

5. That said agreement so approved by the court
provided that the said James Victor Kohler should
pay the premiums on said certificate of insurance
above described and that this answering defendant
should remain the beneficiary thereof. That said
agreement was made in recognition of the de-
pendence of this answering defendant on the said
James Victor Kohler for support for herself and
her minor children mentioned in Exhibit "A"
hereof and that said agreement was made and
entered into in reliance on the agreement of said
James Victor Kohler that he would pay the
premiums on said certificate of insurance and that
this answering defendant should remain the bene-
ficiary thereof, and without such provision said
agreement would not have been made or entered
into. And that said decree of divorce approved said
agreement and property settlement in reliance on
said provision and agreement;

6. That the certificate of insurance, of which
Exhibit "A" of the Bill of Interpleader is a copy,
was delivered to this answering Defendant by the
said James Victor Kohler at the time of said di-
vorce as an assurance to her that she should remain
the beneficiary thereof, and is now, and ever since
has been, in her possession and control ;

YoemenMut.LifeIns.Co.,etal. 23

7. That promptly after the death of said James
Victor Kohler, May 9, 1933, the defendant Daisy
S. Kohler made due proof of Jiis death and of her
claim to the proceeds of said certificate of insur-
ance and filed the same with the plaintiff; all in due
manner and form as required by law and the rules
and by-laws of the plaintiff and that the amoTuit
deposited by the plaintiff in this court is now due
and owing to the defendant Daisy S. Kohler, to-
gether yA\\\ interest [17] on said sum from May 9,
1933, at the rate of eight per cent per annum and in
equity and good conscience should, by the order of
this court be paid to her;

8. That any claim of the said defendant, Mrs.
CUara Kohler, is null, void, of no effect and without
equity in this that the said James Victor Kohler by
the contract and agreement aforesaid induced this
answering defendant to change her position with
reference to him and to waive other rights and
claims that she otherwise had against him, in con-
sideration that he, by said agreement, waived his
right to change his beneficiary in said certificate of
insurance and that in equity and good conscience
he was estopped, and the defendant Clara Kohler
should not be heard to say that he had the right to
change his beneficiary in said certificate of insur-
ance ; and,

9. This answering defendant further alleges that
previous to the date of the divorce aforesaid, the
said Clara Kohler became enamored of the said
James Victor Kohler and they together conspired

24 Daisy S. KoJder vs.

against this defendant to break up her home and to
force her, by a course of cruel conduct toward this
defendant by them, to apply for a decree of divorce
so that said Clara Koliler and James Victor Kohler
might marry, and that said Clara Kohler had full
knowledge of the pendance of the said action for
divorce, and was responsible therefor, and the com-
plaint therein alleged that the said James Victor
Kohler had repeatedly advised the plaintiff therein
and defendant herein that his affections had been
transferred to another woman and of his affection
for her, and Defendant alleges that such "another
woman" was the defendant Clara Kohler herein
and that the said James Victor Kohler consulted the
said Clara Kohler as his intended wife as to the
terms of said property settlement and that she con-
sulted and advised with the said James Victor
Kohler with reference thereto, and had full knowl-
edge of the terms thereof and consented thereto and
accepted the benefits of said pursuant divorce [18]
and is estopped to, and should not in equity be heard
to claim that said James Victor Kohler had any
right to change his beneficiary in said certificate of
insurance and more particular!}- to name the said
Clara Kohler as his beneficiary therein and is
estopped to claim such fund or any part thereof.

By reply thereto the plaintiff admits the truth of
the allegations contained in })aragraph 1 of the
cross complaint contained in the answer and cross
complaint of the defendant Daisy S. Kohler; and,
as to the remainder thereof states that "it has no

YomienMut.Lifelns. Co.,etal. 25

knowledge or information sufficient to form a belief
and for that reason instituted this action, except the
allegation that said answering defendant is entitled
to interest which the plaintiff specifically denies."

The Decree of Divorce referred to in the answer
and cross complaint of the defendant Daisy S.
Kohler is in words and figures as follows, to-wit:

"This cause came on regularly to be heard in
open court this 20th day of February, 1929, upon
the complaint of the plaintiif, plaintiff appearing
herein by her attorneys Lester H. Lol)le and Hugh
R. Adair and the defendant appearing herein by
H. Sol. Hepner, his attorney.

"The defendant herein having interposed a de-
murrer to the complaint, said demurrer was by the
court duly and regularly overruled and the defend-
ant was required to answer instanter, said de-
fendant having refused to answer or plead further
herein his default was duly and regularly entered;
whereupon evidence was offered upon the part of
the plaintiff free from objection as to its compe-
tency, relevancy and materiality from which it ap-
pears and the court so finds that the plaintiff is en-
titled to the relief prayed for in her complaint and
that the material allegations of said complaint have
been proven true.

"It appearing from the evidence that the parties
hereto have effected a property settlement between
themselves whereby the [19] plaintiff has by a bill
of sale transferred and assigned to plaintiff an in-
terest in his said business and property which said

26 Daisy S. Kohler vs.

transfer and settlement appears to this court to be
just and equitable and that in addition thereto ali-
mony should be granted and allowed to the plaintiff
as is prayed for in said complaint, and that the
defendant should be required to pay certain sums
toward the support, maintenance and education of
the two minor children of plaintiff and defendant.

"Now Therefore, on motion of Lester H. Loble
and Hugh R. Adair, attorneys for plaintiff,

"It Is Ordered Adjudged and Decreed:

"1. That the bonds of matrimony heretofore
existing between plaintiff and defendant be and the
same hereby are wholly and permanently dissolved
and the parties hereto freed from all the obligations
thereof.

"2. That the plaintiff be and she is hereby given
and awarded the exclusive custody and control of
Mary Jane Kohler, the minor daughter of the
parties hereto, with the right to take the child from
the State of Montana.

"3. That the parties hereto have the joint cus-
tody and control of Roy Kohler, the uiiuor son of
the parties hereto.

"4. That the defendant be required to and he
is hereby ordered to pay to plaintiff for the sup-
port, maintenance and education of the said Mary
Jane Kohler, the sum of Thirty Dollars ($30.) per
month commencing with the 20th day of February
1929 and to l)o paid on the 20th day of each month
thereafter during the minority of said ^lary Jane
Kohler.

Yoemen Miit. Life his. Co.,etal. 27

a

•5. That the defendant l)e required and he is
hereby ordered to pay to the said Roy Kohler for
his support, maintenance and education the sum of
Fifty DoHars ($50.) per month commencing with
the 20th day of February 1929 and the same to be
paid on the 20th day of each month thereafter dur-
ing the minority of Roy Kohler.

''6. That the defendant be required and he is
hereby ordered to pay to plaintiff the sum of One
Hundred and Twenty-Five Dollars [20] ($125.) per
month as alimony, commencing on the 20th day of
February, 1929, and each and every payment there-
after is to be made on or before the 20th of each
month.

''Done in open court this 20th day of February,
1929.

(Signed) A. J. HORSKY

Judge"

Further Answer and Cross Complaint of the
Defendant Clara Kohler.

By way of further answer and cross complaint
against the defendant Daisy S. Kohler, the defend-
ant Clara Kohler alleges, and the defendant Daisy
S. Kohler by failure to deny admits:

1. "That on the 26th day of July 1923, the plain-
tiff herein for valuable consideration issued to
James Victor Kohler its certain certificate of in-
surance number 177490 in the sum of Two Thou-
sand Dollars ($2,000.00) wherein Daisy S. Kohler,
defendant herein was beneficiary, a copy of which

28 Daisy S. Koli ler vs.

said certificate marked Exhibit "A" is attached to
plaintiff's Bill of Interpleader herein and by this
reference said Exhibit "A" is made a part of this
Answer and Cross Complaint.

2. ''That on the 20th day of February, 1929, the
bonds of matrimony existing between the said James
Victor Kohler and the said Daisy S. Kohler were
dissolved by Decree duly given or made in the Dis-
trict Court of the First Judicial District of the
State of Montana in and for the County of Lewis
and Clark, a copy of which Decree marked ''Ex-
hibit A" is hereto attached and made a part hereof.

3. "That on the 11th day of March, 1929, the
said defendant Mrs. Clara Kohler and the said
James Victor Kohler were united in marriage.

4. "That on the said 20th day of February, 1929,
the said James Victor Kohler and the said defend-
ant Mrs. Dais}' S. Kohler entered into that certain
contract for settlement and adjustment of their
property rights in contemplation of said Decree of
Divorce a copy of which said contract marked "Ex-
hibit B" is hereto attached and made a i3art hereof.

[21]

5. "That on the 9th day of September, 1930, in
the City of Helena, County of Lems and Clark,
State of Montana, in consideration of the sum of
$4,000.00 represented as follows, to-wit: One Thou-
sand Dollars ($1,000.00) in cash and which said
cash the said James Victor Kohler paid to the said
defendant Mrs. Daisy S. Kohler and that certain
promissory note in the words and figures, to-wit:

YoemenMiit. Life In^^i. Co.,etal. 29

S$3,000.00 Helena, Montana, September 9, 1930.
<■ For value received I promise to pay to Daisy
Kohler, or order, the sum of $3,000.00 in the
installments and within the times following, to-
Avit: The sum of $50.00 on or before the 9th
day of October, 1930, and the sum of $50.00 on
or before the 9th day of November, 1930, and
a like sum of $50.00 on or before the 9th day of
each and every month thereafter until said
principal sum is fully paid, together wdth inter-
est thereon at the rate of six per cent per an-
num from date hereof imtil paid, interest pay-
able monthly on or before the 9th day of each
and every month; negotiable and payable at
the Union Bank & Trust Company of Helena,
Montana ; and the makers and endorsers hereby
waive presentment, demand, protest, and notice
of each and all thereof and of non-payment,
and I agree to pay reasonable attorneys fees in
case of suit on this note because of default in
payment of principal or interest or any part
thereof. '

'J. VICTOR KOHLER' "

6. ''That after said settlement the said James
Victor Kohler demanded of said Mrs. Daisy S.
Kohler that she turn over to him said insurance
certificate but the said Mrs. Daisy S. Kohler re-
fused to turn said insurance certificate over to him.

7. "That on the 26th day of August A. D. 1931,
said James Victor Kohler applied to the plaintiff.

30 Dwisy S. Kohler vs.

The Brotherhood of American Yeomen to change
the beneficiary on said certificate of insurance from
Daisy S. Kohler to Clara Kohler but said The
Brotherhood of American Yeomen notified said
James Victor Kohler that it would be necessary to
either produce the original certificate of insurance
or to have a duplicate certificate issued and so on
the 5th day of March, 1932, the said James Victor
Kohler applied to said Plaintiff The Brotherhood
of American Yeomen for a Duplicate Certificate of
insurance a copy of which said certificate of insur-
ance appears as Exhibit "A" of the Bill of Inter-
pleader and by this reference said Exhil)it "A'' is
made a part of this cross complaint." [22]

8. That the said James Victor Kohler died on
May 9, 1933, in the City of Helena, County of Lewis
and Clark, State of Montana, and this answering
defendant (Clara Kohler) made due proof of his
death and of her claim to the benefits and the pro-
ceeds of said certificate of insurance and filed the
same with the plaintiff, The Brotherhood of Ameri-
can Yeomen, all in due manner and form and as
required by law and the rules and ])v-laws of said
plaintiff.

The defendant Clara Kohler therein also alleges,
but the defendant Daisy S. Kohler denies:

1. By giving the note which the said James
Victor Kohler made, executed and delivered to the
defendant Daisy S. Kohler as set out in paragraph 5
of the further answer and cross complaint of the
defendant Clara Kohler the said James Victor

YoemenMut.Lifelns. Co.,etal. 31

Kohler settled in full with the defendant Daisy S.
Kohler for all moneys, obligations, advantages and
benefits conferred, due or which in the future would
become due under and by virtue of said decree of
divorce and under and by virtue of said property
settlement contract and said defendant Daisy S.
Kohler agreed to satisfy in full and mark paid said
decree and contract of record;

2. That the simi of $2,000 deposited by plaintiff
in this court is now due and owing to the defendant
Clara Kohler, together with interest on said sum
from May 9, 1933, at the rate of six per cent per
annum and in equity and good conscience, hj the
order of this court, be paid to her; and,

3. That any claim of the defendant Daisy S.
Kohler is null, void, of no effect and without equity
in that the said defendant Daisy S. Kohler settled
in full with the said James Victor Kohler.

The copy of the Decree of Divorce attached as
Exhibit ''A" to the Further Answer and Cross Com-
plaint of the defendant Clara Kohler is identical
with the copy of the same hereinbefore set out.

The copy of the agreement attached as Ex-
hibit "B" to said Further Answer and Cross Com-
plaint is in words and figures as follows, to-wit:

[23]

''This agreement made and entered into this 20th
day of February, 1929 by and between J. Victor
Kohler of Helena, Montana, party of the first part,
and Daisy Kohler, of the same place, party of the
second part, Witnesseth,

32 Daisy S. Kohler vs.

''Whereas, the parties hereto liave not been con-
genial nor able to agree for considerable time past
and each of the parties hereto are desirous of going
their separate ways and dividing their joint hold-
ings, and,

"Whereas, the second party has declared her in-
tention of instituting a divorce proceeding wnth a
demand for One Hundred and Twenty-Five Dollars
($125.) per month as alimony; Thirty Dollars
($30.) per month for the support, maintenance and
education of Mary Jane Kohler, the minor daugh-
ter; and Fifty Dollars ($50.) per month for the
support, maintenance and education of Roy Kohler,
the minor son, and

"Whereas, each of the parties hereto believe that
an amicable settlement and adjustment of their
property rights can be effected independent of any
court action but which settlement the party of the
second part intends to and will submit to the court
for approval.

"That for and in consideration of the sum of One
Dollar ($1.00) as to the other in hand paid, the re-
ceipt whereof is acknowledged, and other good and
valuable considerations, the parties hereto agree as
follows :

"1. The party of the first part having this day
transferred by bill of sale to the party of the second
part an undivided one-half interest in and to the
business at No. 3 Main Street, kno^vn as the Kohler
Art Store, and the Business at No. 4 Jackson Street,
known as the Kohler Mortuary, all in Helena, Mon-

Yoemen Mut. lAfelns. Co., et al. 33

tana, that the party of the first part shall have the
active management and control of said businesses
and shall receive as salary therefore a sum not to
exceed Three Hundred Dollars ($300.00) per month;
That the party [24] of the first part will conduct
the said businesses in a good businesslike manner;
that he will employ no more help than is necessary
for the conduct of the business and shall not pay
salaries to employees in excess of the usual amount
paid employees in Helena for the same kind and
character of work.

"2. That the parties hereto shall jointly receive
the net profits of said businesses, the net profits
thereof to be arrived at on or before the first day
of January of each year. That from the net profits
of said businesses there shall be annually deducted
the sum of Fifteen Hundred Dollars ($1500), an-
nual alimony allowed second party. That after de-
ducting the said sum of Fifteen Hundred Dollars
($1500) from the net profits, the balance and resi-
due over and above said sum shall be divided equally
between the parties hereto. In no one (1) year shall
there be deducted more than the sum of Fifteen
Hundred ($1500) from said net profits as afore-
said, and the amount deducted shall be the amount
of the alimony actually paid in any one year by the
party of the first part to the party of the second
part.

"3. That the party of the first part shall furnish
quarterly statements of the conditions of said busi-
nesses to the party of the second part ; that the party

34 Daisy S. Kohler vs.

of the second part shall have at all times have the
right to inspect said businesses, its books and af-
fairs but shall not interfere with the actual man-
agement of said businesses unless the party of the
first part should fail to pay the alimony due the
party of the second part or unless he shall fail to
carry out the terms and provisions of this agree-
ment or shall fail to conform to the decree of di-
vorce and each and every provision thereof. If the
party of the first part should fail to carry out the
terms of this agreement or should fail to conform
to the decree of divorce, then the party of the sec-
ond part may enter upon said business premises and
take over and assume the management of said busi-
nesses to the exclusion of the party of the first part
until said party of the first part shall have complied
with the terms of this agreement and the decree of
divorce. [25]

"4. The party of the first part being by the de-
cree of divorce required to pay Roy Kohler the sum
of Fifty Dollars ($50.) per month until said Roy
Kohler becomes twenty-one years of age, it is under-
stood that said sum of Fifty Dollars ($50.) per
month shall be charged against the w^hole of said
businesses.

"5. That the party of the first part agrees to
transfer to the party of the second part on this date
a second mortgage of H. V. Hagler for the pur-
chase of the premises known as 614 Third Street,
Helena, Montana, said second mortgage and the
notes evidenced thereby being in the sum of Thirty-
Five Hundred Dollars ($3500).

YoemenMut.Lifehis.Co,,etal. 35

iii

'6. That the party of the first part agrees to
transfer to the party of the second part by all his
riglit, title and interest in and to the money due or
to become due from Basil Mason for the purchase
of 609 Third Street, Helena, Montana, said transac-
tion being evidenced by notes and deeds in escrow
and being in the sum of Seven Hundred Eighty
Dollars ($780). By the transfer of the Hagler and
Mason obligations to the party of the second part,
she shall become the absolute owner thereof.

^'7. That the party of the first part shall pay to
the party of the second part all of her expenses from
Helena, Montana to Norwalk, Connecticut, where
the party of the second part is going to visit her
daughter, Clarice. That the party of the first part
agrees to at any time thereafter pay all the exi:)enses
of the party of the second part to any point that
she may desire to go from Norwalk for the pur-
pose of making her home.

"8. That the party of the first part agrees that
on or before September 1st, 1929 he will purchase
an automobile for the party of the second part of
her selection, at the point where she then lives and
that the same shall cost not less than Seven Hun-
dred and Fifty Dollars ($750), one-half of the cost
of said automobile shall be paid out of the busi-
nesses of the parties hereto, the remaining one-half
shall be paid individually by the party of the first
part. [26] The Buick automobile now in the pos-
session of the party of the first part shall be his
own individual property.

36 Daisy S. Kohler vs.

''9. That party of the first part agrees immedi-
ately upon being advised by the party of the second
part of her permanent residence to send to hor by
freight prepaid all of her personal effects including
a piano, pictures, radio, books, lamps and dishes.

'^10. That party of the first part agrees that he
mil pay the premium on a certain policy of life in-
surance in the sum Two Thousand Dollars ($2000)
in which the party of the second part is beneficiary
and she shall remain the beneficiary, said policy of
insurance being known as a Yeomen Beneficiary
certificate.

In Witness Whereof, the parties hereto have here-
unto set their hands in duplicate this 20th day of
February 1929."

The Case Came On For Trial before the court
sitting without a jury at Helena, Montana. The
plaintiff was represented by Messrs. Wellington J).
Rankin and Arthur P. Acher, its attorneys. The
defendant Clara Kohler was present in court in
person and represented by Messrs. Paul W. Smith
and David R. Smith, her attorneys; and the de-
fendant Daisy S. Kohler was present in court in
person and represented by Mr. T. H. MacDonald,
her attorney.

Messrs. S. C. Ford, E. G. Toomey and C. A.
Spaulding, all of Helena, Montana and members of
the bar of this court, called as witnesses for the
plaintiff were duly sworn and examined and each
of them stated that in his opinion the services ren-
dered by the attorneys for the plaintiff in the case

Yoem en Mut. Life his. Co.,etal. 37

at bar were reasonably worth the siim of $250.

Daisy S. Kohler, called as a witness on her own
behalf was sworn and testified. While this witness
was on the stand "defendant Daisy S. Kohler 's Ex-
hibit 2", a copy of a letter said to have been sent by
the defendant Clara Kohler to James Victor Kohler,
now deceased, on Jannary 17, 1929, (R. pp. 14-15) ;
*' Exhibit 3 for Clara Kohler", a letter said to have
been addressed by one P. G. Schroeder [27] to the
defendant Daisy S. Kohler nnder date of March 7,
1931, in which, among other things, the writer
stated: "I was in Mr. Kohler 's store yesterday and
he asked about a life insurance policy which I be-
lieve he said was with The American Yeomen, and
he said he would like to have this policy returned
to him. I do not seem to remember very much about
this matter in connection with your original deal
with him. Would you mind writing at your con-
venience and telling me how this matter stands."
(R. p. 19) ; "Exhibit 5 for Clara Kohler", said to
be a copy of a letter written by the defendant Daisy
S. Kohler to said P. G-. Schroeder, under date of
March 10, 1931, in reply to the letter identified as
"exhibit 3 for Clara Kohler", in which the writer
says: "In regard to the insurance policy that ]\[r.
Kohler would like returned to him. I do not feel
that it is necessary to make any reply for Mr.
Kohler — but, to you, for your ovm personal knowl-
edge I will be glad to tell you that Judge Smith has
the original contract, and it states that the policy
had been given to me, and that Mr. K. was to keep

38 Daisy S. Kohler vs.

lip the payment on it. * * * I helped equally with
him to pay for the policy for 30 yrs. and for my
childrens rights, as well as mine, I do not see that
it is right for me to give it to Miss Hardie. She no
donbt will outlive us both, and I believe the children
should have the benefits, and that just brings a ques-
tion to my mind. Would my children benefit by the
policy if I were to die before Mr. K. I suppose if
I refuse to give him the policy he will stop the pay-
ments. I w^ould be glad to have your advice in this
matter, wish I were near enough to talk it over
with you * * *" (R. p. 21): "Exhibit 6 for Clara
Kohler" a letter addressed by P. G. Schroeder to
the defendant Daisy S. Kohler under date of
March 24, 1931, in which he says: "I talked with
Judge Smith about the life insurance policy and he
])rings up several points which may be of interest.
For one thing we all know that with an assessment
company, the insured can very quickly lose all rights
under the [28] policy and have it declared void by
non-payment of the stated assessment. Then the
matter of the terms and conditions as outlined iu
the policy. With a fraternal policy it woidd prob-
ably be found references made to the constitution
and by laws, so before any one can really learn very
much about what can or wdiat can not be done, it is
necessary to read all of these things. Judge Smith
suggests that under some conditions he has known
of a fraternal body, whatever its name is, entirely
refuse to pay a loss on a policy w^hen the beneficiary
of record is no longer living at the time of the death

YoemenMut.Lifelns. Co.,etal. 39

of the insured. He says further tluit he doubts
whether this company would pay a loss to you now
that the insured has another wife. The policy prol)-
ably emphasises the fact that the next of kin would
be recognized and you being removed from this situ-
ation, there is grave doubt in his mind whether you
would ever realize anything from the policy. The
suggestion, therefore, is that you read all these docu-
ments carefully and see what light may be thrown
on the subject." (R. pp. 21-22); "Exhibit 4 for
Clara Kohler", a letter addressed to P. G.
Schroeder by the defendant Daisy S. Kohler under
date of April 7, 1931, in which she sa3^s: "Your
letter regarding the insurance, followed me over
to Pullman, where I was supplying for two weeks,
and back here, so that I have only had it a few days.
The Yeomen lodge here, advise me to write to the
home office, and give them certain information
which I do not possess so I am relying on your gen-
erosity again to ask if you wall find out for me, in
what public record our agreement, at time of di-
vorce, is recorded. The lodge here seem to think, in
as much as Mr. Kohler mentioned giving me the
Yeomen policy, and saying he would keep it up for
me, in his agreement might make it valid. They sup;-
gest that I know just where this agreement is
recorded, number of page etc. so that I can give this
information to the head office when I write. I be-
lieve Judge Smith has this agreement too — if you
cared to look at it. Would it not be a good idea to
ask Mr. [29] Berry, living over the auditorium,

40 Daisij S. KoJiler vs.

who is secY for the Yeomen there, if Mr. K. has
kept up his payments or perhaps you know this
from Mr. Kohler himself. In my reply to your letter
before, perhaps I was a little rude in my reply to be
given Mr. Kohler. I really do not want to be any
thing but kind to him, but I remember at the
moment I read your letter, I felt that he was try-
ing to take the little I had away from me, and I
was bitter for the moment, but now I realize he
cannot take any eternal good from me, and that is
all that counts, so if you think I should give him
an answer, you may say I am thinking it over."
(R. pp. 22-23); and, ''Exhibit 7 for Daisy S.
Kohler", a letter addressed "by The Brotherhood
of American Yeomen, by Geo. F. Wall, Secretary"
to the defendant Daisy S. Kohler, under date of
April 30, 1931, in which the writer says: *'We have
referred your letter of April 21st to our General
Counsel, Mr. H. W. Pitkin. He suggested that we
advise you that we are now attempting to secure a
change in the laws regarding the payment of the
benefits of a certificate to a divorced spouse. In his
opinion, this change will probably be made in the
laws within the next two years and his suggestion
is that you allow the beneficiary to stand on this cer-
tificate as it now is as under the new law, which we
are trying to have passed, a divorced husband or
wife may secure the benefits of a certificate." (R.
pp. 26-27) ; and, ''Exhibit 8 for plaintiff", a letter
addressed to Nuzum and Nuzum, Attorneys-at-Law,
Columbia Building, Spokane, Washington, then

YoemenMut.LifeIns.Co.,etal. 41

representing the defendant Daisy S. Kohler, by the
''Assistant to the General Counsel" of the plaintiff
herein, under date of November 17, 1933, in which
the writer says: ''Last siunmer we wrote you a
letter stating that we were ready and willing to pay
the sum due, to-wit : $2,000.00 if it could be decided
who was the proper l)eneficiary so that the com-
pany might be relieved of all responsibility. We
stated to you at that time that Attorney Paul W.
Smith, Penwell Block, Helena, Montana repre-
sented Mrs. Clara Kohler. We have been waiting
since that date for some reply as to whether the
parties interested could come to some agreement in
regard [30] to how the proceeds would be paid. We
will wait a few days longer and unless we hear fr(^m
you, we will file a bill of interpleader under the Fed-
eral Interpleader statute and let the court deter-
mine the proper party to whom the benefits should
be paid. We are also writing the attorney at Helena
again." (R. p. 28), were offered and received in
evidence.

Clara Kohler, called as a witness on her own be-
half, was sworn and testified (R. pp. 29 etc.). Dur-
ing the course of her examination

"EXHIBIT 9 FOR DAISY S. KOHLER

was offered and received in evidence. This exhibit
is in words and figures as follows :

"Know All Men By These Presents, That I Daisy
Kohler, of the City of Helena, County of Lewis and
Clark, State of Montana, the party of the first part

42 Daisy S. Kohler vs.

for and in consideration of one dollar ($1.00) law-
ful money to nie in hand paid by J. Victor Kohler
of the said City of Helena, the party of the second
part, the receipt whereof is hereby acknowledged,
do by these presents, grant, bargain, sell and convey
unto the said party of the second part, his execu-
tors, administrators and assigns, an undivided one-
half interest of, in and to the goods, wares, mer-
chandise, fixtures, accounts and good will of the
Kohler Art Store, and an undivided one-half inter-
est of, in and to the goods, w^ares, merchandise, fix-
tures, accounts, and good will of the Kohler Mortu-
ary, being all my interest in and to said Kohler Art
Store Located at No. 3 North Main Street in said
City of Helena and Kohler Mortuary located at
No. 4 Jackson Street, m said City of Helena, and
all property pertaining thereto, subject to all exist-
ing liabilities against said business and each thereof
the said party of the second part accepting this bill
of sale assumes and agrees to pay all of said lia-
bilities and agrees to save the said party of the first
part harmless of and free from the pajonent of the
same or any part thereof, the party of the first part
never having participated in contracting any of
said liabilities and never having assumed any re-
sponsibility thereof.

''To Have and to Hold the same, to the said party
of the second part, his executors, administrators
and assigns forever.

"In Witness Whereof I have hereunto set me
hand and seal the ninth day of September, 1930.

[Seal] (Signed) DAISY KOHLER."

YoemenMut.LifeIns.Co.,etal. 43

Among other things this witness testified that the
plaintiff herein was at all times willing and I'eady
to pay the money involved in this suit but did not
know who was entitled to it. (R. p. 35, lines 26-30)

P. G. Schroeder, called as a witness on behalf of
the defendant Clara Kohler was sworn and testified.
He stated among other things, that he ''recalled
being in a conversation with Daisy S. Kohler,
J. [31] Victor Kohler and Clara Kohler during the
months of August and September, 1930" (R. p. 36,
lines 30-32) ; the object of the meeting was for the
purpose of accomplishing, if possible, a settlement
of the differences existing between J. Victor Kohler
and Daisy S. Kohler relating to the alimony prop-
erty settlement or agreement entered into between
J. Victor Kohler and the defendant Daisy 8.
Kohler at the time of their divorce (R. p. 37). This
witness said: ''Daisy Kohler, came to my office and
explained that she was having gTeat difficulty in
securing payments under this alimony agreement
and asked for my suggestions as to what might be
accomplished to secure her payments under this con-
tract from J. Victor Kohler. This resulted in con-
ferences between Mrs. Daisy S. Kohler and J.
Victor Kohler. These conferences were sometimes
held in the office of J. Miller Smith and sometimes
at Brady's office. He was a public accoimtant.
Brady was called in to make an audit of Kohler 's
business affairs. The object of this was to deter-
mine whether or not it was possible to get Mr.
Kohler to meet some of these conditions in the all-

44 Daisy S. Kohler vs.

mony agreement. The financial statement made by
Ml*. Brady indicated that Mr. Kohler 's affairs were
not in good condition at all and it seemed almost
useless to expect him to comply with the terms of
this agreement. I suppose a half dozen or more
meetings were held and it finally resulted in an
offer and acceptance by Mr. Kohler of a settlement
of $4,000— $1,000 of that to be in cash. A note was
given for the balance of the $3,000." (R. p. 37
line 20, p. 38 line 7). ''So far as I recall I never
heard the question of the life insurance policy men-
tioned but once and at that time Daisy Kohler told
me that she had in her possession this life insur-
ance policy, explaining that it was a fraternal con-
cern and she asked me if she should not keep it. I
suggested that perhaps the policy was of very little
value, for two or three reasons — one was that Mr.
Kohler could discontinue the premium payments
and the other that Mr. Kohler 's own life expectancy
might be twenty or thirty [32] years, and also that
the fraternal association might not last as long as
he lived. So I suggested to her that she drop the
insurance matter and say nothing more about it.
That is the only time I ever heard the matter men-
tioned at all. They, themselves, might have talked it
over at times, but I heard of it only once, just as I
said." (R. p. 38, lines 15-29) This \ntness further
testified that a cashier's check for $1,000, payable
to the order of the defendant Daisy S. Kohler, was
handed to him by J. Victor Kohler, now deceased,
along with the note for $3,000. In that connection he

Y omienMut.Lif eltis.C o.,etal. 45

said ^'I have no knowledge of whose money it was.
It was a cashier's check issued by the Union Bank,
so it did not indicate whose money it was, or from
what source it came." (R. pp. 38, line 29 to p. 39,
line 7) Concerning the defendant Clara Kohler this
witness said: "I seldom, if ever, talked with Clara
Kohler. She was always in the back ground. All ne-
gotiations were with J. Victor Kohler."

Concerning the payment of this $1,000 the de-
fendant Clara Kohler testified that she saw the de-
fendant Dais}^ S. Kohler in Kohler 's Art Store on
Main Street, in Helena, Montana, about Septem-
ber 9, 1930; that the defendant Daisy S. Kohler
and J. Victor Kohler, now deceased, then had a con-
versation in her presence about the "Yeomen in-
surance policy." "They were trying to make some
kind of agreement or settlement at the time and
Mr. Kohler asked her to give up the policy and she
agreed to do it if we would pay her $1,000 in cash ;"
that the $1,000 was paid with money of the defend-
ant Clara Kohler. In that connection this witness
said : "I paid the $1,000 because I felt that we would
get the policy back and we would have some pro-
tection. Mr. Kohler was not Avell at the time. The
business was not good at that time." Clara Kohler
also testified that the premiums on the insurance
policy were paid by her from her own funds from
September 9, 1930, up to the time of tlie death of
J. Victor Kohler. When asked "Why did you make
the payments" she replied "Because the business
was in a bad condition and I had a little money of

46 Dwisy S. Koh ler vs.

my own and I used it for the payments." (R. pp. 29-
30). [33] This testimony stands entirely uncontra-
dicted on the record. The witness P. O. Schroeder
also testified that ''Exhihit 3 for Clara Kohler" was
a letter written by him to the defendant Daisy S.
Kohler relative to the insurance policy involved
in this case ''at the request of Mr. Kohler": that
"Exhibit 6 for Clara Kohler" is a copy of a letter
which he also wrote to the defendant Daisy S.
Kohler about the insurance (R. p. 34 lines 23-33).
Referring to the agreement between J. Victor
Kohler, now deceased, and the defendant Daisy S.
Kohler, this witness testified that "Mr. Kohler
acknowledged an indebtedness of $4,000. He said he
could not pay the $4,000 in cash, but he could pay
$1,000 in cash, and he said 'I can give you and will
give you a note for $3,000 payable on the monthly
instalment plan' ". Also that the debt of $4,000
"was intended to be a settlement of all these matters
described by and agreement knowni as an alimony
agreement" and when questioned by the court stated
that it was his understanding that "It was in settle-
ment of the alimony agreed on." When asked:
"When, definitely was this agreement f(n' the settle-
ment of the alimony matters entered into" this wit-
ness replied: "The note is dated Septemlier 9 and
the check which Mr. Kohler gave was delivered on
the 17th, so it would be safe to say that the matter
was finally settled and closed on the 17th of Sep-
tember." (R. p. 40, lines 1-22).

The witness P. G. Schroeder also testified that
"Exhibit 9", a "Bill of Sale from Daisy S. Kohler

YoemenMut,LifeIns.Co.,etdl. 47

of an undivided one half interest in the mercantile
business" was delivered at tlie time of the delivery
of the cashier's check for $1,000 and tlie J. Victor
Kohler note for $3,000 — as "part of the same
transaction." That the final agreement as to the par-
ticular sirni of money to be paid to the defendant
Daisy S. Kohler was made in Judge Smith's office,
''and he then went to Mr. Kohler 's store and re-
peated this proposal that he pay $4,000, having in
mind also that the sum of money must be within
Mr. Kohler 's ability to pay, and it was thought
under the [34] circumstances that Mr. Kohler never
could pay any obligation greater than this $4,000.
Mr. Kohler accepted that proposal when I went up
to his store and told him about it." (R. p. 41, lines
6-30) When asked — do you know^ exactly what this
agreement was this witness answered: "Well as
near as any one; it apparently was not reduced to
writing, at least not to my knowledge. My under-
standing of the negotiations and conversations was
that owing to the fact that the alimony agreement
was so burdensome and could not possibly be com-
plied with, this agreement was to supercede that
whole agreement, and this was to be a new one." (R.
p. 41, Line 32, p. 32, Line 6)

Specific reference to the bill of sale from the de-
fendant Daisy S. Kohler to J. Victor Kohler, now
deceased, this witness said: "It was part of the
general settlement ; it was subsequent to the negotia-
tions. Mrs. Kohler deeded this one half interest in
the mercantile business to Mr. Kohler and Mr.

48 Daisy S. Kohler vs.

Koliler in turn paid by note and check in the sum
of $4,000— $1,000 in cash and note for $3,000. The
main object in making this bill of sale and in
getting Mr. Kohler to accept it was so that she
might be relieved of any further financial responsi-
bility in the event of bankruptcy — if that makes it
clear. ' '

At the close of oral testimony the court dii-ected
that the application of J. Victor Kohler, now de-
ceased, for the beneficiary certificate involved in this
suit, the medical examination of the insured, the
constitution and by-laws of the plaintiff company,
and any amendments thereto, be delivered to the
court by plaintiff's counsel with the certificate of
the secretary under the seal of the plaintiff here to
the effect that they are the by-laws and constitution
in force at the time of the issuance of the first
policy, at the time of the issuance of the second
policy and at the time of the death of the deceased
Kohler and also that plaintiff's counsel furnish the
court with a certified copy of the laws of Iowa \vit\\
reference to fraternal benefit associations in force
at tlie time of [35] the issuance of the original
policy involved in this suit and in force at the time
of the issuance of the second policy issued to the
deceased Kohler. These matters properly certified
were filed by plaintiff's comisel in this suit.

Statutory Law of Iowa relating to fraternal benefit
associations.

From the certified statutes so furnished it ap-
pears and the court so finds that at the time the

Yoemen Mut. Life his. Co., et al. 49

plaintiff company issued to James Victor Kohler,
now deceased, its certificate No. 177490, providing
for death benefits in the sum of $2000 it was and at
all times since then it has been provided by statute
in Iowa as follows:

1. A fraternal benefit association is hereby de-
clared to be a corporation, society, or vohmtary as-
sociation formed or organized and carried on for
the sole benefit of its members and their beneficiary
and not for profit and having a lodge system, with
ritualistic form of work and representative form of
government. C. (97, Sec. 1822; S. 13, Sec. 1822;
C. '24, '27, '31, Sec. 8777 ;

2. Such association shall make provision for the
payment of benefits in case of death, and may make
provision for the payment of benefits in case of
sickness, temporary or permanent physical dis-
ability, either as a result of disease, accident or old
age, provided the period of life at which payment
of physical disability on account of old age com-
mence shall not be under seventy years, subject to
compliance by members with its constitution and
by-laws. C. '97, Sec. 1822; S. 13, Sec. 1822, C. '24,
'27, '31, Sec. 8778 ;

3. Such associations shall be governed by this
chapter, and shall be exempt from the provisions of
the statute of this state relating to life insurance
companies, except as hereinafter provided. C. '97,
Sec. 1825; C. '24, '27, '31, '35, Sec. 8791;

4. No contract between a member and his bene-
ficiaries that the beneficiary or any person for him

50 Daisy S. KoJiler vs.

shall pa}^ such members assessments and dues, or
either of them, shall deprive the member of the
[36] right to change the name of the beneficiary.
C. '97, Sec. 1834; C. '24, '27, '31, and '35, Sec. 8792;

5. All such associations shall upon the issuance
or renewal of any beneficiary's certificate attached
to such certificate or endorsed thereon a true copy
of any application or representation of the meml)er
which by the terms of such certificate are made a
part thereof. C. '97, Sec. 1826; C. '24, '27, '31, and
'35; Sec. 8793;

6. The omission so to do shall not render the cer-
tificate invalid, but if any such association neglects
to comply with the requirements of Section 8793;
it shall not plead or prove the falsity of such cer-
tificate or representation or any part thereof in any
action upon such certificate, and the plaintiff in any
such action, in order to recover against such associa-
tion, shall not be required to either plead or prove
such application or representation. C. '97, Sec. 1826,
C. '24, '27, '31 and '35; Sec. 8794;

7. Such association may be sued in any county
in which is kept the principal place of business, or
in w^hich the beneficiary contract was made, or in
which the death of the member occurred : but actions
to recover old age, sick or accident benefits may, at
the option of the beneficiary, by brought in the
county of his residence. C. '97, Sec. 1827, (\ '24, '27,
'31, and '35, Sec. 8795;

8. No fraternal organization created or or-
ganized under the provisions of this chapter shall

YoemenMut.LdfeIns.Co.,etal. 51

issue any certificate of membership to any person
nnder the age of fifteen years, or over the age of
sixt3"-five years, or unless the beneficiary under such
certificate shall be the wife, hnsl)and, relative by
blood to the fourth degree, father-in-law, mother-in-
law, son-in-law, daughter-in-law, stepfather, step-
mother, step-children, child by legal adoption, legal
representative, or to a person or persons dependent
upon the member; provided that societies whose
membership is confined to members of any one re-
ligious denomination may be permitted to provide
that [37] benefits under their certificates of mem-
bership may be paid to educational, religious or
charitable or benevolent institutions. C. '97,
Sec. 1824, C. '24, '27, '31, and '35, Sec. 8785;

9. If after the issuance of the original certificate
the member shall become dependent upon an in-
corporated charitable institution, he shall have the
privilege, with the consent of the governing body
or board of the society to make such institution his
beneficiary. C. '24, '27, '31 and '35, Sec. 8786 ;

10. Within the above restrictions each member
shall have the right to designate his beneficiary and
from time to time to have the same changed in ac-
cordance with the laws, rules and regulations of
the society. 38 G. A. Ch. 240, approved April 16,
1919, C. '24, '27, '31, '35, Sec. 8787;

11. No beneficiary shall have or obtain any
vested interest in said benefit until the same has
become due and payable upon the death of said
member. 38 Gr. A. Chp. 240, approved April 16, 1919,
c. '24, '27, '31 and '35, Sec. 8788;

52 Daisy S. KoJiler vs.

12. Any society may, by its laws, limit the scope
of beneficiaries within the above classes, 38 G. A.
Ch. 240, approved April 16, 1919, C. '24, '27, '31,
'35, Sec. 8789.

Statutory Law in Montana relating to fraternal
benefit associations.

The court also finds :

First. That at all times since April 1, 1911, it was

and now is provided by statute in Montana as

follows, to-wit:

"Fraternal benefit societies defined. Any cor-
poration, society, order, or voluntary associa-
tion, without capital stock, organized and car-
ried on solely for the mutual benefit of its mem-
bers and their beneficiaries, and not for profit,
and having a lodge system with ritualistic form
of work and representative form of govern-
ment, and which shall make provisions for the
payment of benefits in accordance with sec-
tion 6309, is hereby declared to bo a fraternal
benefit society." (Sec. 1, ch. 140, laws 1911,
Sec. 6305, R. C. M. 1921 and 1935.)

2. "Lodge system defined. Any society hav-
ing a supreme governiuo; or legislative body
and subordinate lodges or [38] branches by
whatever name known, into which members
shall be elected, initiated, and admitted in ac-
cordance with its constitution, laws, rules, regu-
lations, and prescribed ritualistic ceremonies,
which subordinate lodges or branches shall be
required by the laws of such society to hold

YoemenMut.Lif6l7is.Co.,etal. 53

regular or stated meetings at least once in each
month, shall be deemed to be operating on the
lodge system." (Sec. 2, Ch. 140, laws 1911, Sec.
6306, R. C. M. 1921 and 1935.)

3. "Representative form of government de-
fined. Any such society shall be deemed to have
a representative form of government when it
shall provide in its constitution and laws for a
supreme legislative or gOA^erning body, com-
posed of representatives elected either by the
members or by delegates elected directly or indi-
rectly by the members, together with such other
members as may be prescribed by its constitu-
tion and law^s ; provided, that the elective mem-
bers shall constitute a majority in number and
have not less than two-thirds of the votes, nor
less than the votes required to amend its consti-
tution and laws; and provided further, that
the meetings of the supreme or governing body,
and the election of officers, representatives, or
delegates shall be held as often as once in four
years. The members, officers, representatives, or
delegates, or delegates of a fraternal benefit
society shall not vote by proxy." (Sec. 3, Ch.
140, laws 1911, Sec. 6307, R. C. M., 1921 and
1935)

4. "Benefits. Every society transacting busi-
ness under this act shall provide for the pay-
ment of death benefits, and may provide for the
payment of benefits in case of temporary or
permanent physical disability, either as the re-

54 Daisy S. Kohler vs.

suit of disease, accident, or old age; i)rovided,
the period of life at which the payment of bene-
fits for disability on account of old age shall
commence shall not be under seventy year?, and
may jDrovide for monuments or tombstones to
the memory of its deceased members, and for
the payment of funeral benefits. Such society
shall have the power to give a member, when
permanently disabled or on attaining the age of
seventy, all or such portion of the face A^alue
of his certificate as the laws of the society may
provide ; provided, that nothing in this act con-
tained shall be so construed as to prevent the
issuing of benefit certificates for a term of years
less than the whole of life which are payable
upon the death or disability of the member oc-
curring within the term for which the benefit
certificate may be issued. Such society shall,
upon written application of the member, have
the power to accept a part of the periodical
contributions in cash, and charge the remainder,
not exceeding one-half of the periodical contri-
bution, against the certificate, with interest pay-
able or compounded annually at a rate not
lower than four per cent, per annum ; provided,
that this privilege shall not be granted except
to societies which have readjusted or may here-
after readjust their rates of contributions, and
to contracts affected by such readjustments."
(Sec. 5, Ch. 140, laws 1911, Sec. 6309, R. C. M.
1921 and 1935) [39]

Yoe^nen Mut. Ufe Ins. Co., et al. 55

5. '' Certificate. Every certificate issued by
any such society shall specify the amoimt of
benefit provided thereby, and shall provide that
the certificate, the charter or articles of incor-
poration, or if a voluntary association, the
articles of association, the constitution, and
laws of the society, and the application for
membership and medical examination, signed
by the applicant, and all amendments to each
thereof, shall constitute the agreement between
the society and the member, and copies of the
same, certified by the secretary of the society, or
corresponding officer, shall be received in evi-
dence of the terms and conditions thereof, and
any changes, additions, or amendments to said
charter or articles of incorporation, or articles
of association, if a voluntary association, consti-
tution, or laws duly made or enacted subsequent
to the issuance of the benefit certificate, shall
bind the member and his beneficiaries, and shall
govern and control the agreement in all respects
the same as though such changes, additions, or
amendments had been made prior to and were
in force at the time of the application for mem-
bership." (Sec. 8, Ch. 140, Laws 1911, sec. 6313,
R. C. M. 1921 and 1935)

Second. That at all times from April 1, 1911,
down to July 1, 1929, the law of Montana relating
to the classes of persons to whom death benefits
might be paid was as follows, to-wit:

56 Daisy S. Kohler vs.

"Beneficiaries. The payment of death bene-
fits shall be confined to wife, husband, relative
b}^ blood to the fourth degree, ascending or de-
scending, father-in-law, mother-in-law, son-in-
law, daughter-in-law, stepfather, stepmother,
stepchildren, children by legal adoption, or to
a person or persons dependent upon the mem-
ber; provided, that if after the issuance of the
original certificate the member sliall become
dependent upon an incorporated charitable
institution, he shall have the privilege, with the
consent of the society, to make such institu-
tion his beneficiary. Within the above restric-
tions each member shall have the right to desig-
nate his beneficiary, and, from time to time,
have the same changed in accordance with the
laws, rules, or regulations of the society, and
no beneficiary shall have or obtain any vested
interest in the said benefit imtil the same has
become due and payable upon the death of the
said member; provided, that any society may,
by its laws, limit the scope of beneficiaries
within the above classes." (Sec. 6, Ch. 140, laws
1911, Sec. 6311, R. C. M. 1921.)

Third. That by an act approved March 8, 1929,
effective July 1, 1929 (Sec. 90, R. C. M. 1921 and
1935) Sec. 6311 of the Revised Codes of Montana,
1921, just quoted, was amended by inserting therein
the words '^parents by legal adoption" immediately
after the "children by legal adoption". (Sec. 1,
Ch. 84, laws 1929)

Yoemen Mivt. TAfe Ins. Co., etal. 57

Fourth. That by an act approved March 20, 1931,
effective [40] July 1, 1931 (Sec. 90, R. C. M. 1921
and 1935) said Sec. 6311 of the Revised Codes of
Montana, 1921, amended as aforesaid, was further
amended by adding the words ''to a person or
persons upon whom the member is dependent or to
the member's estate if neither wife, husband, child
or parent be living, and in any event to a trustee or
trust company" immediately after the words
"children by legal adoption" appearing in said Sec-
tion 6311, amended as aforesaid.

Fifth. That at all times on and after April 1, 1911,
it has been provided by statute in Montana as fol-
lows, to-wit:

"Certificate. Every certificate issued by any
such society shall specify the amount of bene-
fit provided thereby, and shall provide that the
certificate, the charter or articles of incorpora-
tion, or, if a voluntary association, the articles
of association, the constitution and laws of the
society, and the application for membership
and medical examination, signed by the appli-
cant, and all amendments to each thereof, shall
constitute the agreement between the society
and the member, and copies of the same, certi-
fied by the secretary of the society, or corre-
sponding officer, shall be received in evidence
of the terms and conditions thereof, and any
changes, additions, or amendments to said
charter or articles of incorporation, or articles
of association, if a voluntary association, con-

58 Daisy S. Kohler vs.

stitution, or laws duly made or enacted subse-
quent to the issuance of the benefit certificate,
shall bind the member and his beneficiaries, and
shall govern and control the agreement in all
respects the same as though such changes, addi-
tions, or amendments had been made prior to
and were in force at the time of the application
for membership." (Sec. 8, Ch. 140, Laws 1911 ;
Sec. 6313, R. C. M., 1921 and 1935.)

The court further finds that is appears from the
copies of the Constitution and By-Laws of The
Brotherhood of American Yeomen and amendments
to each thereof, certified as required by Law, Sec.
6313, R. C. M., 1921 and 1935, as follows, to-wit :

First. That at all times on and after September 1,
1921, except as hereinafter noted, the articles of
incorporation of The Brotherhood of American
Yeomen provided, among other things, as follows,
to-wit :

1. ''We, the undersigned, hereby associate our-
selves, our successors and assigns into a body corpo-
rate pursuant to the provisions of Chapter 9,
Title IX, of the 1897 Code of Iowa, and the [41]
amendments thereto, assuming all the powers and
privileges now conferred, or which may hereafter
be conferred upon such corporations under the laws
of the State of Iowa, and do hereby adopt the fol-
lowing articles of incorporation." (Constitution and
By-Laws effective September 1, 1921; Edition of

YoemenMut.Lifelns. Co.,etal. 59

January 1, 1924, Edition of January 1, 1926 ; Edi-
tion of January 1, 1928; Edition of June 12, 1929;
and, Edition of January 14, 1932) ;

2. ''The name of the association shall be the
Brotherhood of American Yeomen;" Article I id;

3. "Its principal place of business shall be at
Des Moines, Iowa; and, this association may trans-
act business in the United States and the Dominion
of Canada;" (Article II id.)

4. "The purpose of said association shall be to
unite in a fraternal association all acceptable white
persons between the ages of sixteen and sixty years,
at nearest birthday, (changed to between the ages of
fifteen and sixty-five June 13, 1925) ; (Article
III id.)

5. "It shall have a lodge system, and a ritualistic
form of work, and the affairs of the association shall
be conducted for the sole benefit of its members and
their beneficiaries, as provided by the laws of the
state in which the association shall conduct busi-
ness, and not for profit, and to that end it shall pro-
vide for and pay to its members or their bene-
ficiaries, death and disability benefits; * * *
(amended effective June 13, 1925, by striking out
the words 'by the laws of the state in which the as-
sociation shall conduct business' and inserting in
lieu thereof the words 'by the laws of the State of
Iowa'.)" (Article III id.)

6. "This association shall have a representative
form of government. * * *." (Article IV id.)

Second. That at all times on and after Septem-
ber 1, 1921, except as herein noted, the By-Laws of

60 Daisy S. Kohler vs.

The Brotherhood of American Yeomen provided,
among other things, as follows, to- wit: [42]

1. The Object of this association shall be the mu-
tual uplifting of the members of the association, the
practice of fraternal love, and to bestow substantial
benefits upon him and his beneficiaries as may be
permitted by the laws of the state wherein this as-
sociation shall operate, * * *. Sec. 3, By-Laws effec-
tive September 1, 1921 ; November 15, 1923; June 13,
1925; January 1, 1928; June 12, 1929; and, Janu-
ary 14, 1932.

2. The Liability of this association for the pay-
ment of benefits upon its certificates, for the social
or other privileges of membership, shall not begin
until all the acts, qualifications and requirements
prescribed for the applicant in these By-Laws shall
have been fully complied with by him, nor until all
acts required of the local examiner and the home-
stead officers shall have l)een fully complied with,
nor until his application shall have been approved
by the Medical Director and a benefit certificate is-
sued thereon and personally delivered to applicant
while in good health. A strict compliance with each
and all of the details above referred to shall be a
condition precedent to the validity of each and
every benefit certificate issued by this association.
Sec. 144, By-Laws effective September 1 , 1921 ; No-
vember 15, 1923; Sec. 105 of By-Laws effective
June 13, 1925 ; Sec. 101 of By-Laws effective Janu-
ary 1, 1928; amended effective June 12, 1929, car-
ried into By-Laws effective January 14, 1932, to
read as follows:

YoemenMut.LifeIns.Co.,etal. 61

''The liability of this association for social or
other privileges or membership shall not begin until
the applicant shall have made all the required pay-
ments, nor until his application shall have been ap-
proved by the Medical Director and a benefit cer-
tificate issued thereon and personally delivered to
the applicant while in good health. A strict com-
pliance with each and all of the details above re-
ferred to shall be a condition precedent to the
validity of each and every benefit certificate issued
by this association." Sec. 102 By-Laws effective
June 12, 1929 and Sec. 102, By-Laws effective Janu-
ary 14, 1932. [43]

3. No Waiver Permitted. No officer of this asso-
ciation or any person or persons whomsoever is au-
thorized or permitted to waive any of the provisions
of these By-Law^s, and such officers and persons are
hereby prohibited from w^aiving any provisions of
these By-Laws. Sec. 146, By-Laws effective Septem-
ber 1, 1921; By-Laws effective January 1, 1924,
amended as Sec. 107 of By-Laws effective June 13,
1925, to read as follows:

No homestead, nor any of its officers or members,
nor any local medical examiner or person engaged
in soliciting applications for membership, shall have
the po\ver or authority to waive any of the pro-
visions of the constitution and by-laws of this asso-
ciation, and the constitution and by-laws, with all
changes, additions and amendments to each thereof
hereafter enacted, shall bind each member and his
beneficiaries, and copies of the constitution and by-

62 Daisy S. Kohler vs.

laws with all changes, additions and amendments to
each thereof or any of them certified by the Secre-
tary of the Association, shall be received and ac-
cepted as prima facie proof of the terms and con-
ditions thereof.

Said Sec. 107 of the By-T.aws effective June 13,
1925, was carried into the by.-laws eifective Janu-
ary 1, 1928, as Sec. 103, into the By-Laws effective
June 12, 1929 and January 14, 1932 as Sec. 104.

4. That Sec. 159 of the By-Laws of tlie Brother-
hood of American Yeomen, effective September 1,
1921, is in words and figures as follows, to-wit:

** Should any member in good standing desire to
change his beneficiary or beneficiaries, he may do so
by returning his certificate to tlie Correspondent of
his Homestead, together with his written request
endorsed thereon for tlie proposed change, giving
the name of the desired beneficiary or beneficiaries,
together with their relation to the member. Said re-
quest shall be accompanied by a fee of fifty cents,
and the Secretary shall endorse on said certificate
said change and return said certificate [44] to tlie
said member. In case the beneficiary member makes
his spouse the beneficiary in his certificate and said
member and his spouse are divorced or legally
separated by order of a court of competent juris-
diction before the death of the member, and said
member makes no change in his beneficiaiy as
named in the certificate, the benefits under said cer-
tificate shall be paid to the legal heirs of such de-
ceased member. If for any cause the beneficiary

YoemenMut.Lifehis.Co.,etal. 63

named in the certificate is barred by law from re-
ceiving the benefits provided for in said certificate,
the legal heirs of the deceased member shall become
the beneficiaries, and the benefits provided for in
said certificate shall be paid to such legal heirs."

5. That said Sec. 159 was amended effective
June 13, 1925, to read as follows, to-wit:

'' Should any member in good standing desire to
change his beneficiary or beneficiaries, he may do so
by returning his certificate to the Correspondent of
his Homestead, together with his written request
endorsed thereon for the proposed change, giving
the name of the desired beneficiary or beneficiaries,
together with their relation to the member. Said re-
quest shall be sent to the Secretary, accompanied by
a fee of fifty cents, and the Secretary shall endorse
on said certificate said change and return said cer-
tificate to the said member.

''If for any cause a beneficiary named in the cer-
tificate is barred by law from receiving the benefits
provided for in said certificate or in case the mem-
ber makes his spouse the beneficiary in his certifi-
cate and said member and his spouse are divorced,
or legally separated by order of a court of compe-
tent jurisdiction before the death of the member,
and said member makes no other disposition of the
benefits, then the benefits which said barred bene-
ficiary would have taken had he not been barred, or
which the surviving spouse would have taken but
for said divorce or order of separation, shall be jDaid
to the person or persons who would have [45] been

64 Daisy S. Kohler vs.

entitled to receive the same if the beneficiary barred
or divorced or separated spouse, as the case may l)e,
had pre-deceased the insured and the insured had
named no other beneficiary." Sec. 123, By-Laws ef-
fective June 13, 1925;

6. That said section of the By-Laws of The
Brotherhood of American Yeomen as so amended
was carried into the By-Tjaws thereof effective
January 1, 1928, as Sec. 112;

7. That said Sec. 159 of the By-Laws of The
Brotherhood of American Yeomen effective Sep-
tember 1, 1921, amended as aforesaid, was acjain
amended and carried into the By-Laws of said asso-
ciation effective June 12, 1929 and January 14, 1932
as Sees. 113 and 114, which are in words and fip^ires
as foHows, to-wit :

'^ Should any member in good standing desire to
change his beneficiary or beneficiaries, he may do so
by returning his certificate to the Local Secretary
of his Homestead, together with his written request
endorsed thereon for the proposed change, giving
the name of the desired beneficiary or beneficiaries,
together with their relation to the member. Said re-
quest shall be sent to the Secretary, and the Secre-
tary shall endorse on said certificate said change and
return said certificate to the said member."

*'If for any cause a beneficiary named in the cer-
tificate is barred by law from receiving the benefits
provided for in said certificate or in case the mem-
ber makes his spouse the beneficiary in his certifi-
cate and said member and his spouse are divorced,

Yoem^enMut. Life Ins. Co.,etdl. . 65

or legally separated by order of a court of compe-
tent jurisdiction before the death of the member,
and said member makes no other disposition of the
benefits, then the benefits which said barred bene-
ficiary would have taken, had he not been barred,
or which the surviving spouse would have taken but
for said divorce or order of separation, shall be
paid to the person or persons who would have been
entitled to receive the same if the beneficiary barred
or divorced or spouse separated by order of court,
as the case may [46] be, had pre-deceased the in-
sured and the insured had named no other bene-
ficiary.

"Provided, however, that payment of the bene-
fits to the beneficiary designated in a certificate
shall relieve the Association from all liability mider
said certificate unless prior to the date of said pay-
ment the Secretary of the Association shall have re-
ceived notice in writing that the designated bene-
ficiary is barred by law^ from receiving said benefits
or was divorced or legally separated from the mem-
ber at the time of the death of the member. ' '

8. Lost Certificate. That Sec. 160 of the By-Laws
of The Brotherhood of American Yeomen, effective
September 1, 1921, is in words and figures as fol-
lows, to-'^ivdt:

*'In case a benefit certificate is lost or destroyed
or otherwise out of the possession or control of the
member insured, a new certificate may be issued
upon the filing of a sworn statement by the member
^^■ith the Correspondent of his Homestead, accom-

66 . Daisy S. Kohler vs.

panied by a fee of 50 cents, which statement and fee
shall be forwarded under seal of the Homestead to
the Secretary, w^ho shall thereupon issue a new cer-
tificate; provided, that the explanation contained in
the sworn statement is satisfactory to the Secre-
tary."

That said Section w^as carried into the By-Laws
of said Association, effective November 15, 1923, as
Sec. 160, and, effective June 13, 1925 as Sec. 124. ;

That said Section so carried into said By-Laws
effective in 1923 and 1925, as aforesaid, was
amended, effective January 1, 1928, to read as fol-
low'S, to-wit:

"In case a benefit certificate is lost or destroyed
or otherwise out of the possession or control of the
member insured, a new certificate may be issued
upon the filing of a sworn statement by the member
with the Correspondent of his Homestead, which
statement shall be forwarded under seal of the Home-
stead to the Secretary who shall thereupon issue a
new certificate ; provided, that the [47] explanation
contained in the sworn statement is satisfactory to
the Secretary." (By-Laws 1928, Sec. 113.)

That said Section 113, effective January 1, 1928,
as aforesaid, was amended effective June 12, 1929,
to read as follows, to-wit :

*^In case a benefit certificate is lost or destroyed
or otherwise out of the possession or control of the
member insured a new certificate may be issued
upon the filing- of a sworn statement and w]-itten re-
quest by the member with the Secretary who shall

YomienMut.LifeIns.Co.,etal. 67

thereupon issue a duplicate certificate, provided the
explanation contained in the sworn statement is
satisfactory to the Secretary. The Secretary will
furnish on request a proper form for said request
and affidavit." (By-Laws of 1929, Sec. 115.)

That said Section 115 of the By-Laws of 1929 was
carried into the By-Laws of the Brotherhood of
American Yeomen, effective January 14, 1932, as
Section 115 thereof and the same has been con-
tinued in force from said last mentioned date.

The Court further finds the fact to be as follows,
to-wit :

1. That at the time the Bill of Interpleader was
filed herein on January 19, 1934, two adverse claim-
ants, Mrs. Clara Kohler of Helena, Montana and
Mrs. Daisy S. Kohler of Spokane, Washington, citi-
zens of different states, were claiming to be entitled
to the money admittedly due and owing from the
plaintiff herein to either one or the other of them
under and pursuant to the terms and conditions of
its certificate of insurance No. 177490, providing
for death benefits in the sum of $2,000, wherein
Daisy S. Kohler, then the wife of James V. Kohler,
the insured, was named as beneficiary; or, its dupli-
cate certificate of membership bearing the same
number issued by it to the said James Y. Kohler
after his divorce from the defendant Mrs. Daisy
S. Kohler, which provided for the payment of death
benefits in the sum of $2,000 to the defendant Clara
Kohler, then and at all times thereafter to the time

68

Daisy S. Kohler vs.

of the death of said James Y. Kohler, on IMay 9,
1933, the wife of said James Y. Kohler. [48]

2. That at the time said Bill of Interpleader
was filed as aforesaid the plaintiff herein neither
had nor claimed any interest in the subject matter
of said contention between the defendants Mrs.
Daisy S. Kohler and Mrs. Clara Kohler, to-\vit : The
right to receive said sum of $2,000 ; had incurred no
independent liability to either of the parties de-
fendant herein ; did not in any respect collude with
either of said defendants, but was perfectly indif-
ferent between them; being in the position of a
mere stakeholder;

3. That at the time said Bill of Interpleader was
filed as aforesaid the plaintiff was uninformed and
uncertain as to the respective rights of said defend-
ants and could not then determine without hazard to
itself to which of said defendants the money due
upon said certificate of insurance No. 177490 or
said duplicate certificate bearing the same number
rightfully belonged and was then in doubt as to
which of said defendants was right in her respective
claim; had no means of satisfactorily ascertaining
what facts were relied upon by either of said de-
fendants in support of her claim of right ; could not
then pay over the money due Tipon said certificate
of insurance No. 177490 or said duplicate certificate
bearing the same number without taking upon itself
the responsibility of determining doubtful ques-
tions of law and fact and incurring the risk of being
subjected to great cost and expense in defending

Yoem en Miit. Life Ins. Co.,et dl. 69

itself and to a multiiDle payment of said indebted-
ness if it should finally appear that plaintiff liad
wrongfully determined in favor of either of said
defendants and claimants at the expense of the
other and without being involved in a multiplicity
of suits ;

4. That plaintiff has not at any time asked any
relief herein at the request of either of said defend-
ants but asks relief solely of its o\\m free will to
avoid being molested and injured touching the
matters set forth in said Bill of Interpleader;

5. That prior to the filing of said Bill of Inter-
pleader herein the plaintiff heie attempted by
correspondence with attorneys for [49] the said de-
fendants and claimants to have them determine l)e-
tween themselves their respective rights to said
$2,000; that it was not until the latter part of No-
vember, 1933, that plaintiff was informed by said
attorneys that there was no possibiliy of the parties
interested, the parties defendant here, being brought
to some agreement in regard to how said money
should be paid, and it then appearing impossible
for them to do so the plaintiff filed its Bill of Inter-
pleader herein with reasonable diligence after hav-
ing become satisfied that the rights of said defend-
ants and claimants could only be determined by
suit;

6. That at the time said Bill of Interpleader was
filed herein as aforesaid, the plaintiff here paid the
amount due under said certificate of insurance No.
177490 or said duplicate certificate of membership

70

Daisy S. Kokler vs.

bearing the same number, to-wit: the sum of $2,000
into the registry of this court, and to a])ide the
judgment of the court;

7. That $150 is a reasonable attorney's fee to be
allowed to the plaintiff in this case ;

8. That on February 20, 1929, the bond of matri-
mony then existing between the said James Victor
Kohler and the said Mrs. Daisy S. Kohler was dis-
solved by a decree of divorce duly given, made and
entered of record in the district court of the First
Judicial District of the State of Montana, in and
for the County of Lewis & Clark;

9. That the defendant Mrs. Daisy S. Kohler
was never dependent upon said James Victor
Kohler at any time after the dissolution of said
bond of matrimony as aforesaid;

10. That on February 20, 1929, said James Vic-
tor Kohler and the defendant Mrs. Daisy S. Kohler
entered into a certain contract in writing for the
settlement and adjustment of their property rights
in contemplation of said decree of divorce, a copy of
which is attached to the answer and cross complaint
of the defendant Mrs. Clara Kohler, filed herein on
March 30, 1934; [50]

11. That insofar as it is material at this point,
said contract is in words and figures as follows, to-
wit: "10. That party of the first part (James Victor
Kohler, interpolated), agrees that he will pay the
premium on a certain policy of life insui'ance in the
sum of Two Thousand Dollars ($2,000) in which
the party of the second part (the defendant Mrs.

YoemenMut.LifeIns.Co.,etal. 71

Daisy S. Kohler, interpolated), is beneficiary and
she shall remain the beneficiary, said policy of in-
surance being- kno^^ni as a Yeomen Beneficiary Cer-
tificate ; ' '

12. That on March 11, 1929, the said James
Victor Kohler and the defendant Mrs. Clara
Kohler were miited in marriage and at all times
thereafter up to the time of the death of said James
Victor Kohler on May 9, 1933, were husband and
wife;

13. That on September 9, 1930, in the City of
Helena, County of Lewis & Clark, State of Mon-
tana, in consideration of the sum of $4,000 repre-
sented as follows, to-wit: One Thousand Dollars
($1,000) to be and which was paid to the defendant
Mrs. Daisy S. Kohler in cash and the execution
and delivery by said James Victor Kohler of a cer-
tain promissory note to the defendant Mrs. Daisy
S. Kohler and which he did thereafter and pursuant
to said agreement execute and deliver to her, the
same being in words and figures as follows, to-wit:

''$3,000.00 Helena, Montana,

September 9, 1930.
For value received I promise to pay to Daisy
Kohler, or order, the sum of $3,000.00 in the in-
stallments and within the times following, to-
wit : The sum of $50.00 on or before the 9th day
of October, 1930, the sum of $50.00 on or ])e-
fore the 9th day of November, 1930, and a like
sum of $50.00 on or before the 9tli day of each
and every month thereafter until said principal

72 Baifiy S. Koltler vs.

sum is fully paid, together with interest tliereon
at the rate of six per cent per annum from date
hereof until paid, interest payable monthly on
or before the 9th day of each and every month ;
negotiable and payable at the Union Bank &
Trust Company of Helena, Montana ; and the
makers and endorsers hereby waive present-
ment, demand, protest, and notice of each and
all thereof and of non-payment, and I agree to
pay reasonable attorneys fees in case of suit on
this note because of default in payment of
principal or interest or any part thereof."

'M. VICTOR KOHLER." [51]

The said James Victor Kolder paid and settled
in full with the defendant Mrs. Daisy S. Kohler for
all moneys, obligations, advantages and benefits con-
ferred or intended to ])e conferred and then due and
owing or which in tlie future would become due or
owing under or by virtue of said decree of divorce
and under or by virtue of said property settlement
contract between said James Victor Kohler and the
defendant Mrs. Daisy S. Kohler and the latter then
and there promised and agreed to accept and re-
ceive the same in full settlement for all moneys, ol)-
ligations, advantages and benefits conferred or in-
tended to be conferred and then due and owing or
which in the future would become due or owing to
her under or by virtue of said decree of divorce or
by virtue of said property settlement contract be-
tween said James Victor Kohler and the defendant

Yoemen Mut. Life Iiis. Co.,etal. 73

Mrs. Daisy S. Kohler and the latter then and there
promised and agreed to satisfy in full and mark
said decree and contract paid of record;

14. That at the same time and place and as a
part of the same transaction the defendant Mrs.
Daisy S. Kohler subscribed, acknowledged and de-
livered to said James Victor Kohler a certain in-
strument in writing, Exhibit "9" for Daisy S. Koh-
ler, wherein and whereby, for value received, she
granted, bargained, sold and conveyed unto the
said James Victor Kohler and his executors, ad-
ministrators and assigns an undivided one-half in-
terest of, in and to the goods, wares, merchandise,
and fixtures, accounts and good will of the Kohler
Art Store, located at 3 North Main Street in the
City of Helena, Montana, and an undivided one-
half interest of, in and to the goods, wares, mer-
chandise and fixtures, accounts and good will of the
Kohler Mortuary, located at No. 4 Jackson Street in
said city, and all property pertaining thereto sub-
ject to all existing liabilities against said businesses
and each thereof, and the said James Victor Koh-
ler by accepting said bill of sale assumed and agreed
to pay all of said liabilities and agreed to save the
defendant Mrs. Daisy S. Kohler from pajnnent of
the same or any part thereof; [52]

15. That immediately before subscribing, ac-
knowledging and delivering said instrument in writ-
ing to said James Victor Kohler, as aforesaid, the
defendant Mrs. Daisy S. Kohler caused an audit
of his business affairs to be made by a public ac-
countant for the purpose of determining w^hether

74 Daisy S. Kohler vs.

it was possible for him to meet the conditions of
said decree of divorce and said alimony agreement
between him and the defendant Mrs. Daisy S. Koh-
ler; that the financial statement made by said pub-
lic accountant indicated that Mr. Kohler 's business
was not in a good condition, in the words of the de-
fendant Mrs. Daisy S. Kohler "The business was
doing nothing — it was gone", and that he w^ould not
be able to continue to comply with the terms of said
decree of divorce and said alimony agreement ; that
upon being informed of these facts the defendant
Mrs. Daisy S. Kohler subscribed, acknowledged
and delivered said instrument in w^riting to said
James Victor Kohler for the purpose and with the
intent on her part of getting out of the businesses
referred to iii said instrument in writing so that she
would not be liable for one-half of the debts thereof ;
and that "the main object in making this bill of
sale and in getting Mr. Kohler to accept it was so
that she (the defendant Mrs. Daisy S. Kohler, inter-
polated) might be relieved of any further financial
responsibility in the event of bankruptcy", as stated
by the witness P. G. Schroeder ;

16. That at the time said agreement was en-
tered into by and between said James Victor Koh-
ler and the defendant Mrs. Daisy S. Kohler on Sep-
tember 9, 1930, as aforesaid, it was understood and
agreed by and between them that it "was to take the
place of the agreement that was entered into * * *
at the time of the divorce", as stated by the de-
fendant Mrs. Daisy S. Kohler while testifying
herein as a witness on her own behalf; and that the

YoemenMut.LifeIiis.Co.,etal. 75

payment of said $1,000 in cash and the subscribing
and delivery of said note for $3,000, paid subscribed
and delivered, as aforesaid, was intended [53] to
be in full settlement and satisfaction of all of the
matters described in the agreement "known as the
alimony agreement" made and entered into by said
James Victor Kohler and the defendant Mrs. Daisy
S. Kohler on February 20, 1929, a copy of which
is attached, as Exhibit ''B", to the Separate An-
swer and Cross Complaint of the defendant Mrs.
Clara Kohler filed herein on March 30, 1934, as
stated by the witness P. G. Schroeder;

17. That at the time the said $1,000 was paid
to the defendant Mrs. Daisy S. Kohler, as aforesaid,
said James Victor Kohler was wholly unable to
make said payment from his own funds, all of
which was then well known to and understood by
the defendant Mrs. Daisy S. Kohler;

18. That before said $1,000 was paid in cash to
the defendant Mrs. Daisy S. Kohler, as aforesaid, it
was understood and agreed by and between her and
James Victor Kohler that upon the payment of said
$1,000 in cash and the execution and delivery of the
note mentioned and referred to in Finding Num-
ber Thirteen (13) above (page 43), she would give
up and deliver to said James Victor Kohler said
beneficiary certificate No. 177490 and renounce and
give up any right or claim of right which she then
had or claimed to have to, under or by virtue of the
benefit certificate involved in this suit, and would
make no claim thereon, thereunder or because
thereof, all of which was then made known to and

76 Daisy S. Kohler vs.

understood by the defendant Mrs. Clara Kohler by
said James Victor Kohler and the defendant Mrs.
Daisy S. Kohler, with the intent in each of them
that the defendant Mrs. Clara Kohler, acting in re-
liance thereon and in the belief that the defendant
Mrs. Daisy S. Kohler would carry out her part of
said agreement, would advance the $1,000 which was
agreed to be paid and which was paid by said James
Victor Kohler to the defendant Mrs. Daisy S.
Kohler in cash, as aforesaid ;

19. That at the time it was understood and
agreed by and between the defendant Mrs. Daisy S.
Kohler and James Victor Kohler that [54] upon
the pajrment of said $1,000 in cash and the execution
and delivery of the note mentioned and referred to
in finding No. 13 above (page 43), she would give
up and deliver to said James Victor Kohler said
beneficiary certificate No. 177490 and renounce and
give up any right or claim of right which she then
had or claimed to have to, under or by virtue of the
benefit certificate involved in this suit and would
make no claim thereon, thereimder or because
thereof and made the same known to the defendant
Mrs. Clara Kohler, said promises were made by the
defendant Mrs. Daisy S. Kohler without any inten-
tion of performing them or either or any of them
and with the intent in her to deceive the defendant
Mrs. Clara Kohler and with the intent and in the
expectation that as a result of being so deceived by
the defendant Mrs. Daisy S. Kohler the defendant
Mrs. Clara Kohler would furnish to said James
Victor Kohler, from her own funds, the $1,000 which

YoemenMut.LifeIns.Co.,etal. 77

was agreed to be paid and which was actually paid
in cash by said' James Victor Kohler to the defend-
ant Mrs. Daisy S. Kohler.

20. That said $1,000 so paid in cash as aforesaid
was paid wdth the money of the defendant Mrs.
(lara Kohler furnished by her to said James Vic-
tor Kohler for that purpose as a result of and in
reliance upon said last mentioned agreement by and
between said James Victor Kohler and the defend-
ant Mrs. Daisy S. Kohler and in the belief that
upon the payment of the same and the execution
and delivery of said promissory note by said James
Victor Kohler to the defendant Mrs. Daisy S. Koh-
ler, as aforesaid, the latter would receive and ac-
cept the same in full settlement for all moneys, ol^-
ligations, advantages and benefits conferred or in-
tended to be conferred and then due and owing or
which in the future would become due or owing to
her under or by virtue of the decree of divorce and
the ]3roperty settlement contract between said James
Victor Kohler and the defendant Mrs. Daisy S.
Kohler hereinbefore more particularly mentioned
and referred to and satisfy in full and mark said
decree and contract paid of record; renounce and
give up all right or claim of right which she then
had or claimed to have to, under or by virtue [55]
of the benefit certificate involved in this suit; and,
would make no claim thereon, thereunder or because
thereof ;

2L That had it not been for her understanding
of and reliance upon said agreement by and between
said James Victor Kohler and the defendant Mrs.

78 Daisy S. Koliler vs.

Daisy S. Kohler, and the performance by the de-
fendant Mrs. Daisy S. Kohler of her part of said
agreement as aforesaid, the defendant Mrs. Clara
Kohler would not have advanced said $1,000 from
her own funds to be used for the purpose aforesaid ;

22. That the defendant Mrs. Daisy S. Kohler
failed, refused and neglected to carry out her part
of said agreement so entered into by and between
said James Victor Kohler and the defendant Mrs.
Daisy S. Kohler on September 9, 1930, as afore-
said; and did not give up or deliver to said James
Victor Kohler said beneficiary certificate No. 177,-
490 or renounce or give up any right or claim of
right which she may then have had or claimed to
have to, imder or by virtue of the benefit certificate
involved in this suit, notwithstanding the fact that
said James Victor Kohler made demand upon her
that she do so; but, on the other hand she, the de-
fendant Mrs. Daisy S. Kohler, did make claim
thereon, thereunder and because thereof thereafter
and prior to the filing of the Bill of Interpleader
herein as aforesaid, and at all times during the i)ro-
gress of this suit, and failed, refused and negelected
to satisfy in full and mark said decree and contract
paid of record ;

23. That at no time after said $1,000 was paid to
the defendant Mrs. Daisy S. Kohler in cash and
said note was executed and delivered to her by said
James Victor Kohler, as aforesaid, was the defend-
ant Mrs. Daisy S. Kohler dependent in any degree
upon said James Victor Kohler for support, main-
tenance or assistance;

YoemenMiit.LifeIns.Co.,etal. 79

24. That at no time after said $1,000 was paid
to the defendant Mrs. Daisy S. Kohler in cash and
said note was executed and delivered to her by said
James Victor Kohler, as afoi'esaid, was there any
obligation on his part, either moral, legal, or equit-
able, in any degree to support, maintain or assist
her; [56]

25. That after September 9, 1930, the premiums
on the benefit certificate involved in this suit were
paid by the defendant Mrs. Clara Kohler with her
o^\VL money; and,

26. The Court fuii:her finds the facts in issue in
this suit generally in favor of the defendant Mrs.
Clara Kohler and against the defendant Mrs. Daisy
S. Kohler.

CONCLUSIONS OF LAW.

On the facts so found as aforesaid the Court con-
cludes the law to be as follows, to-wit :

1. That the plaintiff herein has fully complied
w^ith the statute in such cases made and provided
and should be discharged from further liability to
the defendants Mrs. Clara Kohler and Mrs. Daisy
S. Kohler, or either of them, based on, growing out
of or arising from the issuance by it of its of its
said certificate of insurance No. 177490, providing
for death benefits in the sum of $2,000, wherein the
defendant Mrs. Daisy S. Kohler, then the wife of
James Victor Kohler, the insured, and now de-
ceased, was named as beneficiary; or, its duplicate
certificate of membership bearing the same nmnber
issued by it to the said James Victor Kohler, after

80 Daisy S. KoJiler vs.

his divorce from the defendant Mrs. Daisy S.
Kohler, which provided for the pajonent of death
benefits in the sum of $2,000 to the defendant Mrs.
Clara Kohler, then and at all times thereafter to
the time of the death of said James Victor Kohler,
on May 9, 1933, the wife of said James Victor Koh-
ler; and that the said defendants and each of them
should be enjoined permanently from instituting or
prosecuting any suit or proceeding in any state
court or in any other federal court on said certifi-
cate of insurance No. 177490 and said duplicate cer-
tificate of membership bearing the same numl)er >o
issued by the plaintiff herein as aforesaid, or either
of them. Act of May 8, 1926, c. 273, Sees. 1-3, 44
Stat. 416; subdivision (26) of Sec. 41, Title 28,
U. S. C;

2. That as at the time the Bill of Interpleader
was filed herein on Januarj^ 19, 1934, the plaintiff
herein was charged merely with the duty of holding
the money involved in this suit and paying it [57]
over to the proper person, and plaintiff having paid
said money into the registry of the court, there to
abide the judgment of the court; and neither fault,
bad faith nor unreasonable delay on its part having
been shown, it is not justly chargeable with interest.

33 C. J. p. 202, Sec. 58; Peterson v. Chorley,

Cal. App , 284 Pac. 956, 957; Grover v. Sentell,

C. C. A. 5th C, 66 Fed. 179, 181;

3. That the plaintiff herein should be allowed
and paid its costs and disbursements herein neces-
sarily expended, including a reasonable attorney's
fee hereby fixed at the sum of $150 out of the money
paid by it into the registry of the court, there to

YoemenMiit.LifeI'ns.Co.,etal. 81

abide the judgment of the court. Mass. Mut. Life
Insurance Co. v. Morris, et al., C. C. A. 9th C, 61
Fed. 2d. 104, and cases there cited; Act of May 8,
1926, c. 273, Sec. 1-3, 44 Stat. 416; subdivision (26)
of Sec. 41, Title 28, U. S. C. ; Mutual Life Insurance
Co. V. Bondurant, C. C. A. 6th C, 27 Fed. 2d. 464,
465-6;

4. That in addition to the fees for other services
rendered in this suit in equity, the Clerk of this
court shall charge, collect and deduct therefrom one
per centum of $2,000 deposited by the plaintiff
herein in the registry of the court, there to abide
the judgment of the court, pursuant to statute, —
the Acts of February 22, 1917, c. 113, 39 Stat. 929;
February 25, 1925, c. 317, Sees. 1-3, 43 Stat. 976;
and. May 8, 1926, c. 273, Sees. 1-3, 44 Stat. 416, Sub-
division (26) and Sec. 44, Title 28, IT. S. C, as
amended, for receiving, keeping and paying out said
money pursuant to said statute and by order of this
court. R. S. Sec. 828, from act of Feb. 26, 1850, c.
80, Sec. 1, 10 Stat. 163, 167; sub-division 8 of Sec.
555, Title 28, U. S. C. Mutual Life Insurance Co.,
et al. V. Phelps, Clerk of District Court, C. C. A.
6th C, 27 Fed. 2d. 464, 466(5) ; McGovern, et al. v.
U. S. C. C. A. 7th C, 272 Fed. 262 ; U. S. v. Payne,
et al. District Court, W. D. Washing-ton, N. D.,
Neterer, 30 Fed. 2d. 960, 961 -'2; Miss. Mills Co. v.
Cohn, 150 U. S. 202, 204- '7; [58]

5. That at the time the plaintiff herein issued
to James Victor Kohler, now deceased, its certifi-
cate of insurance No. 177490, providing for death
benefits in the sum of $2,000, wherein the defend-

82 Daisy S. Kohler vs.

ant Mrs. Dais.y S. Kohler, then the wife of said
James Victor Kohler, the insured, was named as
beneficiary and at all times thereafter, for the pur-
poses of this suit, the plaintiff herein was a fra-
ternal benefit society within the meaning of the law
of the states of Iowa and Montana. Iowa Code 1897,
Sees. 1822, 1824, 1825, and 1834; Iowa Codes of
1924, 1927, 1931, Sees. 8777, 8778, 8785, 8786, 8788,
8789, and 8792 ; and, 38 G. A. Iowa, ch. 240, approved
April 16, 1919; ch. 140, Laws of Montana, 1911, Sees.
6305, 6306, 6307, 6308, 6309, 6311, 6313; and 6321,
R. C. M. 1921 and 1935;

6. Becoming a member of an incorporated bene-
ficiary society is more than a contract ; it is entering
into a complex and abiding relation; the rights of
members have their source in the constitution and
by-laws of the corporation and can only be deter-
mined by resorting tliereto, and such constitution
and by-laws must necessarily be construed by the
laws of the state of its incorporation. Modern
Woodmen of America v. Mixer, 267 IT. S. 544,
550- '1; Royal Arcanun v. Green, 237 IT. S. 532,
541- '2 ; Bush v. Modern Woodman of America, 1 82
la. 515, 162 N. W. 59, 60; Booz, et al. v. Booz, et al.,

la , 167 N. W. 93, 94; Styles v. Byrne, 89

Mont. 243, 252- '3;

7. The statute of the state of Iowa is the organic
law of the plaintiff in the case at bar. It is under
this law that it lives, moves and has its being. From
this law it gets its right to do business and by this
law it is regulated and controlled. Bush v. Modern
Woodmen of America, 182 la. 515, 162 N. W. 59,

YoemenMut.LifeIns.Co.,etal. 83

60; Royal Arcanim v. Green, 237 U. S. 531, 542- '3;
Modern Woodmen of America v. Mixer, 267 IT. S.
544, 551 ; Styles v. Byrne, 89 Mont. 243 ; 254- '5 ;

8. The purpose and intent of the law making
body in creating [59] and recognizing Fraternal
Benefit Societies is not that they may do a general
insurance business, but a fraternal business. Bush
V. Modern Woodmen of America, 182 la. 515, 162
N. W. 59, 60; Modern Woodmen of America v.
Mixer, 267 U. S. 544, 551 ; Nitsche v. Security Bene-
fit Association, 78 Mont. 532 ;

9. The legislature of the state of incorporation
has power to limit the classes of persons who may
be beneficiaries of a fraternal benefit society. Bush
V. Modern Woodmen of America, 182 la. 515, 162
N. AV. 59, 60; Richey v. Sovereign (^amp Woodmen

of the World, la , 168 N. W. 276, 280;

Nitsche v. Security Benefit Association, 78 Mont.
532, 546, 255 Pac. 1052; Modern Woodmen of
America v. Mixer, 267 U. S. 544, 550- '1;

10. At the time the plaintiff herein issued to
James Victor Kohler, now deceased, its benefit cer-
tificate No. 177490 providing for death benefits in
the sum of $2,000, wherein the defendant Mrs. Daisy
S. Kohler, then the wife of said James Victor Koh-
lei', was named as beneficiary, she was qualified to be
designated as such thereunder by the laws of the
states of Iowa and Montana. Iowa Code of 1897,
Sec. 1824; R. C. M 1921, Sec. 6311; and, by the con-
stitution and By-Laws of the Brotherhood of
American Yeomen; Preamble; Article III of the
Constitution of the Brotherhood of American Yeo-

84 Daisy S. Koliler vs.

men ; Sees. 3 and 148 of the By-Laws of the Brother-
hood of American Yeomen, effective September 1,
1921 ; John Hancock Insurance Co. v. Yates, 299
U. S. 178, 182- '3; American Surety Co. of New
York V. Clarke, 94 Mont. 1, 9-10, 20 Pac. 2d. 831,
833; Styles v. Byrne, 89 Mont. 243, 252- '3, 296 Pac.
577 ; Richey v. Sovereign Camp Woodmen of Amer-
ica, la , 168 N. W. 276, 280(18) ;

11. The defendant Mrs. Daisy S. Kohler could
neither have nor obtain an 3^ vested interest in said
benefit certificate until the same had become due and
payable on the death of James Victor Kohler, 38
G. A. la., Ch. 240, approved April 16, 1918; la.
Code 1924, 1927, 1931 and 1935, Sec. 8788 ; Sec. 6,
Ch. 140, Laws of Montana, 1911, [60] Sec. 6311, R.
C. M. 1921 and 1935 '; Bush v. Modern Woodmen of
America, 182 la. 515, 162 N. W. 59, 61; Holden v.
Modern Brotherhood of America, 151 la. 673, 132
N. W. 329, 331; Schmidt v. Northern Life Associa-
tion, 112 la. 41, 83 N. W. 800, 802 ; Nitsche v. Se-
curity Benefit Association, 78 Mont. 532, 546- '7, 255
Pac. 1052;

12. That said James Victor Kohler had the right
from time to time to have the beneficiary designated
in said benefit certificate No. 177490 changed in ac-
cordance with the laws, rules and regulations of the
society. 38 G. A. la., ch. 240, approA^ed April 16,
1919, la. Codes 1924, 1927, 1931 and 1935, Sec. 8788,
Sec. 6, Ch. 140, Laws of Montana, 1911, Sec. 6311,
R. C. M. 1921 and 1935 ; cases cited under conclusion
of law No. 11; Sec. 159 of the By-Laws of the

YoemenMut.LifeIns.Co.,etal. 85

Brotherhood of American Yeomen, effective Sep-
tember 1, 1921, Sec. 123, id., effective June 13, 1925,
Sec. 112, id., effective January 1, 1928, Sees. 112 and
113, id., effective June 12, 1929 and January 14,
1932; Bush V. Modern Woodmen of America, 182
la. 515, 162 N. W. 59, 61 ; Thomas v. Locomotive

Engineer's Mutual Association, la , 183 N.

W. 628, 632 ; Sec. 6, Ch. 140, Laws of Montana, 1911,
Sec. 6311, R. C. M. 1921 and 1935 ;

13. That immediately upon the entry of the de-
cree of divorce in the District Court of the First
Judicial District of the State of Montana, in and
for the Coimty of Lewis and Clark, on February 20,
1929, wherein and whereby, among other things, it
was '' Ordered, adjudged and decreed: I. That the
bonds of matrimony heretofore existing between
plaintiff (Mrs. Daisy S. Kohler, interpolated.) and
defendant (James Victor Kohler, interpolated,) be
and the same hereby are wholly and permanently
dissolved and the parties hereto freed from all of
the obligations thereof; * * *;" She ceased to be
qualified for designation as a beneficiary in said
benefit certificate No. 177490 mentioned and referred
to in conclusion of law No. 6 above ; and thereupon
she became and at all times thereafter she was and
she now is entirely without right to claim or re-
ceive [61] any part or portion of the $2,000 paid by
the plaintiff herein into the registry of the court,
there to abide the judgment of the court. la. Code
1897, Sec. 1824, la. Code of 1924, 1927, 1931, and
1935, Sec. 8785; Articles of Incorporation of the

86 Daisy S. Kohler vs.

Brotherhood of American Yeomen ; Sec. 3, By-Laws
of the Brotherhood of American Yeomen, effective
September 1, 1921, November 15, 1923, June 13,
1925, January 1, 1928, June 12, 1929, and January
14, 1932; Sec. 144, By-Laws effective Septeml^er 1,
1921 and November 15, 1923, Sec. 105, By-Laws ef-
fective June 13, 1925, Sec. 101, By-Laws effective
January 1, 1928 and Sec. 102, By-Laws effective
June 12, 1929 and January 14, 1932; Sec. 146, By-
Laws effective September 1921 and JauTiary 1, 1924,
Sec. 107, By-Laws effective June 13, 1925, Sec. 103,
By-Laws effective January 1, 1928 and Sec. 104, By-
Laws effective Jime 12, 1929 and January 14, 1932;
Sec. 159, By-Laws effective September 1, 1921, Sec.
123, By-Laws effective June 13, 1925, Sec. 112, By-
Laws effective January 1, 1928, and Sees. 113 aud
114, By-Laws effective June 12, 1929, and January
14, 1932.

Said Section 159 of the By-Laws of the Brother-
hood of American Yeomen, effective September 1,
1921, and all of the sections of the By-Laws re-
ferred to thereafter, provide in effect that in case
the beneficiary member makes his spouse the ])ene-
ficiary in his certificate and said member and his
spouse are divorced or legally separated hy order of
a court of competent jurisdiction before the deatli
of tlie member, and said member makes no change
in liis beneficiary as named in the certificate, the
benefits under said certificate shall be paid to the
legal heirs of said deceased member. If for any
cause the beneficiary named in the certificate is

YoemenMut.LifeIns.Co.,etal. 87

barred by law from receiving the benefits provided
in said certificate, the legal heirs of the deceased
member shall become the beneficiaries, and the bene-
fits provided for in said certificate shall be paid to
such legal heirs. See Iowa Code of 1897, Sees. 1822,
1825, 1834, 1824; Iowa Code 1924, 1927, 1931, and
1935, Sees. 8778, 8791, 8792, 8785, 8788, and 8789 ;
and, G. A. Iowa, ch. 240, approved April 16, 1919,
Iowa Codes [62] of 1924, 1927, 1931, Sees. 8787, 8788
and 8789; Sees. 6311, 6313, R. C. M. 1921 and 1935;
Nitsche v. Security Benefit Association, 78 Mont.
533, 546-7, 255 Pac. 1062, Sec. 6321, R. C. M. 1921
and 1935; Weiditschka v. Supreme Tent, Knights of

Maccabees, la , 170 N. W. 300, 301- '2 and

175 N. W. 835, 837 ; and, cases there cited.

It should always be remembered in this connec-
tion that the constitution of the Brotherhood of
American Yeomen, effective September 1, 1921, pro-
vides that ''this association shall be empowered to
transact business in the United States and the Do-
minion of Canada", Article II; and that the By-
Laws of the Brotherhood of American Yeomen, ef-
fective September 1, 1921, provide: 1. That one of
the essential objects of the association is "to bestow
substantial benefits upon him (the member, inter-
polated) and his beneficiaries as may l)e permitted
by the laws of the state wherein this association
shall operate"; Sec. 3; 2. That the liability of the
association "for the payment of benefits upon its
certificates, * * * shall not begin mitil all the acts,
qualifications and requirements prescribed for the

88 Daisy S. Kolilcr vs.

applicant in these By-Laws shall have been fully
complied with by him, nor nntil all acts required
of the local examiner and the Homestead officei's
shall have been fully complied with, nor until his ap-
plication shall have been approved by the Medical
Director and a benefit certificate issued thereon and
personally delivered to the applicant while in o-ood
health. A strict compliance with each and all of the
details above referred to shall be a condition prece-
dent to the validity of each and every benefit cer-
tificate issued by this association;" Sec. 144; 3. '*No
officer of this association or any person or persons
whomsoever is authorized or permitted to waive any
of the provisions of these By-Laws, and such officers
and persons are hereby prohibited from waiving
any provisions of these By-Laws;" Sec. 146; and,
4. That Section 148 (first) provides "that the state-
ments in the application of said member, including
his [63] answers in the medical examination, a
copy of which appears upon the back hereof, and
which is hereby made a part of this agTeement, are
true in every particular, and shall be held to be
strict warranties, and shall, with the Articles of Li-
corporation and By-Laws of this association, form
the only basis of this contract, for the liability of
the association under this section the same as if
fully set forth herein, * * *."

It should also be borne in mind in this connec-
tion that at the time said benefit certificate No.
177490 was issued to said James Victor Kohler on
July 26, 1923, the Brotherhood of American Yeo-

Yo€/r}ienMut.LifeIns.Co.,etal. 89

men was operating in the State of Montana through
its Homestead No. 546, located at Helena, Montana,
and that said benefit certificate was personally de-
livered to said James Victor Kohler at that place.
Sec. 6313, R. C. M. 1921 and 1935; John Hancock
Insurance Co. v. Yates, 299 U. S. 178, 182, Weidit-

schka V. Supreme Tent, Knights of Maccabees,

la , 170 N. W. 300, 301- '2 and 175 N. W. 835,

837; Nitsche v. Security Benefit Association, 78
Mont. 532, 546- '9; Code of Iowa, 1924, 1927, 1931,
1935, Sec. 11921; Thomas v. Locomotive Engineer's
Mutual Life and Accident Association, 191 la. 1152,
183 N. W. 628, 639-40; Sees. 10581 and 7521, R. C.
M. 1921; Nelson v. Davenport, et al., 86 Mont. 1,
6-7, 281 Pac. 537.

14. That the object of that portion of the agree-
ment entered into by and between James Victor
Kohler and the defendant Mrs. Daisy S. Kohler, on
February 20, 1929, in words and figures as follows :
''10. That party of the first part (James Victor
Kohler, interpolated,) agrees that he will pay the
premium on a certain policy of life insurance in the
sum of Two Thousand Dollars ($2,000) in which the
party of the second part (Mrs. Daisy S. Kohler, in-
terpolated,) is beneficiary and she shall remain the
beneficiary, said policy of insurance being known
as a Yeomen Beneficiary Certificate", was not law-
ful, said parties were not capable of contracting
with reference thereto, the same was contrary to ex-
press provision of law as well as to [64] the policy
of express law and otherwise contrary to good

90 Daisy S. Kohler vs.

morals and in direct violation of the constitution
and By-Laws of the Brotherhood of American Yeo-
men, with the result that the same then was, at all
times since then has been and now is void and of
no legal force or effect. Sees. 7467, 7468, 7498, 7499,
7553, 6311, and 7502, R. C. M. 1921 ; Mtsche v. Se-
curity Benefit Association, 78 Mont. 532, 546-7(3),
255 Pac. 1052, Thomas v. Locomotive Engineer's
Mutual Life and Accident Association, 191 la. 1152,
183 N. W. 628, 639- '40; Weiditschka v. Supreme

Tent, Knights of Maccabees, la , 170 N. W.

300, 301- '2 and 175 N. W. 835, 837; and cases there
cited; Codes of la. 1897, 1924, 1927 and 1931; L\.
Code of 1897, Sees. 1822, 1825, 1834 and 1824; la.
Code of 1924, 1927, 1931 and 1935, Sees. 8777, 8778,
8791, 8792, 8785 and 8787 ; and 38 G. A. la., ch. 240,
approved April 16, 1919;

15. If the defendant Mrs. Daisy S. Kohler had
acquired any right to, under or by virtue of said
benefit certificate No. 177490, under or as a result
of the agreement mentioned and set out in conclu-
sion of law No. 14 above, she lost the same as a re-
sult and under and by virtue of the understanding
and agreement entered into by and between her and
said James Victor Kohler on September 9, 1930.
See further findings of fact numbered 13, 16, 17, 18,
19, 20 and 21, pages 43 and 45 to 47 above ; and that
to hold that she now has or at any time since she
entered into the understanding and agreement here-
in referred to has had any right to, under or by
virtue of said benefit certificate No. 177490 or the

Yo€menMut.LifeIns.Co.,etal. 91

money paid by the plaintiff herein into the registry
of the court, there to abide the judgment of the
court, would be to allow her to change her purpose
to the injury of another, — the defendant Mrs. Clara
Kohler; and to infringe upon the rights of and to
perpetrate a fraud upon the latter as well as to take
adA^antage of her own wrong which the law does
not permit. Sees. 8738, 8741, 8743, [65] 7479, 7480,
7481, subds. 4 and 5, 8746 and 8752, R. C. M. 1921
and 1935; Bullard v. Zimmerman, et al., 82 Mont.
434, 481, 286 Pac. 512 ;

16. That when the decree of divorce hereinbefore
referred to was rendered and entered therein on
February 20, 1929, the District Court of the First
Judicial District of the State of Montana, in and
for the County of Lewis and Clark, did not have in
mind or intend or attempt to transfer to the de-
fendant Mrs. Daisy S. Kohler any right to, mider
or by virtue of the benefit certificate involved in this
suit, the decree provides only for the permanent
dissolution of the bonds of matrimony then exist-
ing between Mrs. Daisy S. Kohler and James Y.
Kohler, the custody of their children; and the pay-
ment by him to her of money as alimony for the
support of the children and herself. See copy of
decree of divorce attached to the separate answer
and cross complaint of the defendant Mrs. Clara
Kohler filed herein March 30, 1934; Sees. 10519,
10558 and 10561 R. C. M. 1921 and 1935; State ex
rel Durland v. Board of County Commissioners,
Mont , 64 Pac. 2d. 1060, 1061- '2;

92 Daisy S. Kohler vs.

17. That had said state court intended or at-
tempted to transfer to the defendant Mrs. Daisy S.
Kohler the benefit certificate involved in this suit
it was without legal power to do so. The rule in
Montana is that under no circumstances could the
court transfer the title absolutely. Thrift v. Thrift,
54 Mont. 463, 464, 171 Pac. 272 ;

18. That at no time after September 9, 1930,
was the defendant Mrs. Daisy 8. Kohler a person
dependent upon said James Victor Kohler within
the meaning of the law of Iowa or Montana or the
constitution and the By-Laws of the Brotherhood
of American Yeomen. Iowa Code 1897, Sec. 1824;
Iowa Codes of 1924, 1927, 1931 and 1935, Sec. 8785;
Sec. 6311, R. C. M. 1921 and 1935; Bush v. Modem

Woodmen of America, la , 152 N. W. 31,

39; Richey v. Sovereign Camp W. O. W., la.

, 168 N. W. 276, 278 and cases there cited ; 166'\

19. That at all times after the defendant Mrs.
Clara Kohler and the said James Victor Kohler
were united in marriage on March 11, 1929, she was
qualified to be designated as the beneficiary in said
benefit certificate No. 177490 and in the duplicate
certificate of membership bearing the same number
issued by the Brotherhood of American Yeomen to
said James Victor Kohler, on March 11, 1932, which
provided for the payment of death benefits in the
sirni of $2,000 to the defendant Mrs. Clara Kohler,
then and at all times thereafter to the time of the
death of said James Victor Kohler the wife of said

Yoem en 31 u t. Lifelns. Co., et dl. 93

James Victor Kohler. Iowa Code 1897, Sec. 1824;
Iowa Codes 1924, 1927, 1931 and 1935, Sec. 8785;
Sec. 6311, R. C. M. 1921 and 1935;

20. That upon said James Victor Kohler, while
a member in good standing of Homestead No. 546
of the Brotherhood of American Yeomen located at
Helena, Montana, causing said duplicate certificate
of membership bearing No. 177490, which provided
for the payment of death benefits in the sum of
$2,000 to the defendant Mrs. Clara Kohler, then his
wife, to be issued to him by the Brotherhood of
American Yeomen she became and at all times re-
mained entitled to the payment of said benefit in
the event of the death of said James Victor Kohler.
See duplicate certificate No. 177490; sees. 113, 114
and 115 of the constitution and By-Laws of the
Brotherhood of American Yeomen, effective Jan-
uary 14, 1932; Sec. 6311, R. C. M. 1921 and 1935;
38 G. A. la., ch. 240, approved April 16, 1919; Iowa
Codes 1924, 1927, 1931 and 1935, Sees. 8785, 8787
and 8788; and,

21. That upon the death of said James Victor
Kohler, on May 9, 1933, the defendant Mrs. Clara
Kohler became, ever since then she has been and she
now is entitled as the beneficiary named in said
duplicate certificate of membership bearing No.
177490, to the $2,000 paid by the plaintiff herein
into the registry of the court, there to abide the
judgment of the court, subject, however, to the de-
ductions authorized by law and hereinbefore men-
tioned and set out. [67]

94 Daisy S. Kohler vs.

It follows that it should be and it is hereby or-
dered :

1. That the plaintiff herein be and it is hereby
discharged from further liability to the defendants
Mrs. Clara Kohler and Mrs. Daisy S. Kohler, or
either of them, based on, growing out of or arising
from the issuance by it of its said certificate of in-
surance No. 177490, on July 26, 1923, providing for
death benefits in the sum of $2,000, wherein the de-
fendant Mrs. Daisy S. Kohler, then the wife of said
James Victor Kohler, the insured and now deceased,
was named as beneficiary, or its duplicate certificate
of membership bearing the same number issued by it
on March 11, 1932, to the said James Victor Kohler
after his divorce from the defendant Mrs. Daisy
S. Kohler, which provided for the payment of death
benefits in the smn of $2,000 to the defendant Mrs.
Clara Kohler, then and at all times thereafter to
the time of the death of said James Victor Kohler,
on IMay 9, 1933, the wife of said James Victor
Kohler ;

2. That the defendants Mrs. Clara Koliler and
Mrs. Daisy S. Kohler, and each of them, should be
and they are hereby enjoined permanently from
instituting or prosecuting any suit or proceeding in
any state court or in any federal court oii said cer-
tificate of insurance No. 177490 and said duplicate
certificate of membership bearing the same number
so issued by the plaintiff herein as aforesaid, or
either of them;

YoemenMut.LifeIns.Co.,etal. 95

3. That the plaintiff herein is not chargea])le
with interest on the money paid by it into the regis-
try of the court, there to abide the judgment of the
court, or otherwise or at all;

4. That the plaintiff herein should be and it is
hereby allowed its costs and disbursements herein
necessarily expended, including a reasonable at-
torney's fee hereby fixed by the court at the sum of
$150, to be paid out of the money paid by it into the
registry of the court, there to abide the judgment
of the court;

5. That in addition to the fees for other services
rendered in this suit in equity, the clerk of this court
shall charge, collect and deduct therefrom one per
centum of the $2,000 paid by the plaintiff herein
into the registry of the court, there to abide the [68]
judgment of the court, pursuant to statute, for re-
ceiving, keeping and paying out said money pur-
suant to said statute and by order of this court ;

6. That the defendant Mrs. Daisy S. Kohler is
and at the time the Bill of Interpleader was filed
herein on January 19, 1934, she was entirely without
right to claim, receive or recover any part or portion
of the $2,000 paid by the plaintiff herein into the
registry of the court, there to abide the judgment
of the court, or any relief of any kind, character,
nature or description whatsoever in this suit in
equity;

7. That the clerk of this court shall pay to the
defendant Mrs. Clara Kohler, on demand, the bal-
ance of the $2,000 paid by the plaintiff herein into
the registry of the court, there to abide the judg-

96 Daisy S. Kohler vs.

ment of the court, remaining in the registry of the
court after the deductions authorized and directed
to be made by paragraphs ^'4" and "5" of this order
have been made ; and,

8. That the defendant Mrs. Clara Kohler do
have and recover of and from the defendant Mrs.
Daisy S. Kohler her costs and disbursements herein
necessarily expended, together with the total amount
of all deductions authorized and directed to be
made by paragraphs "4" and "5" of this order.

Decree will be entered accordingly.

Done in open court at Helena, Montana, June 15,
1937.

JAMES H. BALDWIN,

Judge.

[Endorsed] : Filed June 15, 1937. [69]

Yoemen Mut. Life Ins. Co.,etal. 97

Thereafter, on June 21, 1937, Decree was duly
filed and entered herein in the words and figures
following, to-wit: [70]

In the District Court of the United States for the

Helena Division of Montana.

In Equity— No. 1494.

YEOMEN MUTUAL LIFE INSURANCE COM-
PANY, formerly Brotherhood of American
Yeomen, a corporation, Des Moines, Iowa,

Plaintiff,

vs.

MRS. CLARA KOHLER, 3 North Main Street,
Helena, Montana, and MRS. DAISY S. KOH-
LER, 501 O & B Building, Spokane, Wash-
ington,

Defendants.
DECREE.

This case having duly and regularly come on for
trial before the court sitting without a jury in
Helena, Montana, on the 22nd day of Jauuary, 1936.
The plaintiff was represented by Messrs. Wellington
D. Rankin and Arthur P. Acher, its attorneys. The
defendant Clara Kohler, was present in court in
person and represented by Messrs. Paul W. Smith
and David R. Smith, her attorneys; and the de-
fendant, Dais3" S. Kohler was present in court and
represented by Mr. T. H. MacDonald, her attorney,
and the court having heard the testimony and hav-
ing examined the proofs offered by the respective
parties, and the court being fully advised in the

98 Daisy S. Kohler vs.

premises, and having filed herein its Findings of
Fact and Condusions of Law, and having directed
that judgment be entered in accordance therewith;
Now, Therefore, by reason of the law and findings
aforesaid :

It is hereby ordered, adjudged and decreed:

1. That the plaintiff herein be and it is hereby
discharged from further liability to the defendants
Mrs. Clara Kohler and Mrs. Daisy S. Kohler, or
either of them, based on, growing out of or arising
from the issuance by it of its said certificate of in-
surance No. 177490, on July 26, 1923, providing for
death benefits in the sum of $2,000, wherein the de-
fendant Mrs. Daisy S. Kohler, then the wife of said
James Victor Kohler, the insured and now deceased,
was named as beneficiary, or its duplicate certificate
of membership bearing the same number issued by
it on March 11, 1932, to the said James Victor Koh-
ler after his divorce from the defendant Mrs. Daisy
S. Kohler, which provided for the payment of death
benefits in the [71] sum of $2,000 to the defendant
Mrs. Clara Kohler, then and at all times thereafter
to the time of the death of said James Victor Koh-
ler, on May 9, 1933, the wife of said James Victor
Kohler ;

2. That the defendants Mrs. Clara Kohler and
Mrs. Daisy S. Kohler, and each of them, should be
and they are hereby enjoined permanently from
instituting or prosecuting any suit or proceeding in
any state court or in any federal court on said cer-
tificate of insurance No. 177490 and said duplicate

YoemenMut.Lifel7is.Co.,etal. 99

certificate of membership bearing the same number
so issued by the plaintiff herein as aforesaid, or
either of them;

3. That the plaintiff herein is not chargeable
vrith interest on the money paid by it into the regis-
try of the court, there to abide the judgment of the
court, or otherwise or at all;

4. That the plaintiff herein is hereby allowed the
sum of $150.00 to be paid to it by the Clerk of this
Court out of the money paid by said plaintiff into
the registry of the court and its costs and disburse-
ments herein necessarily expended, taxed at $51.73.

5. That the clerk of this court is hereby allowed
the sum of $20.00 to be paid out of the money paid
to said clerk by said plaintiff and to be deducted by
said clerk from said money.

6. That the defendant Mrs. Daisy S. Kohler is
entirely without right to claim, receive or recover
any part or portion of the said sum of $2,000.00
paid by the plaintiff herein into the registry of the
court and is without any relief of any kind, char-
acter, nature or description in this suit in equity.

7. That the defendant Mrs. Clara Kohler is here-
by allowed the sum of $2000.00 paid by the plain-
tiff herein into the registry of the court, less the
sum of $150.00 plaintiff's attorneys fee, the sum of
$20.00, the clerk's fee, and the sum of $51.73 plain-
tiff''s costs herein necessarily expended and taxed by
the court ; and said remaining sum shall be paid by
the clerk of this court to the defendant Mrs. Clara
Kohler.

100

Daisy S. Koliler vs.

8. That the defendant Mrs. Clara Kohler do have
and recover of and from the defendant, Mrs. Daisy
S. Kohler, the sum of $170.00, also costs and dis-
bursements herein necessarily expended by said
Mrs. Clara Kohler and taxed at $16.83. [72]
Dated: June 21, 1937.

JAMES H. BALDWIN,

Judge.

[Endorsed] : Filed and entered June 21, 1937. [73]

Thereafter, on June 26, 1937, Assigmnent of Er-
rors was duly filed herein in the words and figures
following, to-wit: [74]

[Title of District Court and Cause.]

ASSIGNMENT OF ERRORS.

Comes now the defendant Daisy S. Kohler by
and through her attorney and solicitor and makes
and files her assignments of error as follows :

I.

The Court erred in allowing any attorneys fee to
the plaintiff.

II.

The Court erred in entering its decree that plain-
tiff is not chargeable with interest on the money jDaid
by it into court.

YoemenMut.LifeIns.Co.,etal. 101

III.

The Court erred in entering in its decree that the
defendant Daisy S. Kohler is without right to re-
cover any portion of the sum of two thousand dol-
lars paid by the plaintiff into court.

IV.

The Court erred in entering its decree that the
defendant Clara Kohler be allowed the sum of two
thousand dollars paid into court by plaintiff.

V.

The Court erred in entering its decree that the
Defendant Clara Kohler do have and recover from
Defendant Daisy S. Kohler the sum of [75] one
hundred and seventy dollars with costs and dis-
bursements taxed at $

VI.

The Court erred in finding that the Defendant
Daisy S. Kohler was not a legal dependent on the
deceased Victor Kohler at any and all times after
their divorce to the time of his death.

VII.

The Court erred in finding that the amount re-
ceived by Daisy S. Kohler was to be in full settle-
ment for all matters described in the alimony agree-
ment and particularly erred in finding such agree-
ment applied to the certificate of insurance in this
case.

102

Daisy S. Koliler vs.

VIII.

The Court erred in finding that before Daisy S.
Kohler was paid one thousand dollars in September
1931 it was understood that she would give up the
policy of insurance with the understanding that
Clara Kohler would advance the one thousand dol-
lars.

Wlierefore, Appellant prays that the judgment
and decree of the District Court for the Helena
Division of Montana may be reversed \\'ith direc-
tions to said District Court to take such action
thereafter as may be proper in the premises in ac-
cordance with the decision rendered therein.

T. H. MACDONALD,
Attorney for Appellant.
Copy of the above assignment had and service
admitted this 23rd day of June, 1937.

Personal service of within Assignments made and
admitted, and receipt of true copy thereof acknowl-
edged this 26th day of June, 1937.

WELLINGTON D. RANKIN,
ARTHUR P. ACHER,

Attorneys for Plaintiff.
PAUL W. SMITH &
DAVID R. SMITH,

Attorneys for Clara Kohler.

[Endorsed] : Filed June 26, 1937. [76]

YoemenMut.Lifel7is.Co.,etal. 103

Thereafter, on June 26, 1937, Petition for Appeal
was duly filed herein, in the words and figures fol-
lowing, to-wit: [77]

[Title of District Court and Cause.]

PETITION FOR APPEAL.

Conies now defendant Daisy S. Kohler and con-
ceiving herself aggrieved by the decree of the above
entitled court entered herein on the 22nd day of
June 1937, does hereby appeal from the said decree
and the whole thereof to the United States Circuit
Court of Appeals for the Ninth Circuit and prays
that her appeal be allowed and that a transcript of
the record and the proceeding and papers upon
which said decree was made, and entered, duly au-
thenticated may be sent to the United States Court
of Appeals, Ninth Circuit.

T. H. MACDONALD,
Attorney for Defendant and Appellant
Daisy S. Kohler.

Personal service of within Petition made and ad-
mitted, and receipt of true copy thereof acknowl-
edged this 26th day of June, 1937.

WELLINGTON D. RANKIN,
ARTHUR P. ACHER,
PAUL W. SMITH &
DAVID R. SMITH,
Attorneys for Plaintiff & Clara Kohler.

[Endorsed] : Filed June 26, 1937. [78]

104 Daisy S. Kohler vs.

Thereafter, on June 26, 1937, Allowance of Ap-
peal was duly filed herein, in the words and figures
following, to-wit: [79]

[Title of District Court and Cause.]

ALLOWANCE OF APPEAL.

And now to-wit, on this 26th day of June, 1937,
it is ordered that the appeal herein be allowed as
prayed for, and it is further ordered that a bond
in the sum of Three hundred dollars with sureties
to be approved by the Court be given for the pay-
ment of all costs which may hereafter be incurred
against the said Defendants and Appellants in the
United States Circuit Court of Appeals for the
Ninth Circuit and for the payment of all damages
which may be sustained by the respondents by rea-
son of said appeal and that such bond shall stay the
decree rendered and entered in this Court.

Signed this 26th day of Jmie, 1937.

CHARLES N. PRAY,

Judge.

[Endorsed] : Filed June 26, 1937. [80]

Thereafter, on Jime 26, 1937, Bond on Appeal
was duly filed herein, in the words and figTires fol-
lowing, to-wit: [81]

[Title of District Court and Cause.]

BOND ON APPEAL.

Know all men by these presents, that we Daisy S.
Kohler and United States Fidelity and Guaranty
Company, of Baltimore, Maryland, as sureties are

Yoemen Mut. Life Iiis. Co.,etal. 105

held and firmly bound to the above named plain-
tiff and Clara Koliler defendant in the sum of Three
hundred dollars ($300.00) lawful money of the
United States, to be paid to them and their respec-
tive executors, administrators and successors; to
which payment well and truly to be made, we bind
ourselves and each of us, our successors and assigns,
jointly and severally by these presents.

Whereas the above-named plaintiff has prosecuted
an appeal to the United States Circuit Court of Ap-
peals for the Ninth Circuit to reverse the judgment
of the District Court of the United States, in and
for the District of Montana, Great Falls Division in
the above-entitled cause.

Now, therefore, the condition of this obligation is
such that if the above-named plainti:ff shall prose-
cute its said appeal to effect and answer all costs,
and all damages awarded against her if it fail to
make good its plea, then this obligation shall be
void; otherwise to remain in full force and effect.

Sealed with our seals and dated this 26th day of
June, 1937. [82]

DAISY S. KOHLER
By T. H. MACDONALD,
As her Attorney.
[Seal] UNITED STATES FIDELITY

AND GUARANTY (^OMPANY,
By L. K. ALBRECHT,

Attorney-in-Fact.
Approved Jmie 26, 1937.

CHARLES N. PRAY,

Judge.

[Endorsed] : Filed June 26, 1937. [83]

106 Daisy S. Kohler vs.

Thereafter, on June 26, 1937, Citation on Ap-
peal was issued herein, which original Citation is
hereto annexed and is in the words and figures fol-
lowing, to-wit: [84]

[Title of District Court and Cause.]

CITATION ON APPEAL.

To Yeomen Mutual T^ife Insurance Company, for-
merly Brotherhood of American Yeomen, a corpora-
tion, Des Moines, Iowa, and Mrs. Clara Kohler, 3
North Main Street, Helena, Montana, Greeting :

You are cited and admonished to be and appear at
the session of the United States Circuit Court of
Appeals for the Ninth Circuit, to he held in the City
of San Francisco, State of California, within thirty
days from the date hereof, pursuant to an appeal
taken, allowed and filed in the office of the Clerk
of the United States District Court, for the District
of Montana, on the 26th day of June, 1937, in that
certain suit, being In Equity No. 1494, wherein
Daisy S. Kohler is appellant and Yeomen Mutual
Life Insurance Company, formerly Brotherhood
of American Yeomen, a corporation, Des Moines,
Iowa, and Mrs. Clara Kohler, 3 North Main Street,
Helena, Montana, are respondents, to show cause, if
any there be, why the judgment and decree made
and entered in the above-entitled action, in said ap-
peal mentioned, should not be reversed, and why
speedy relief should not be done the parties in this
behalf.

YoemenMut.LifeI'ns.Co.,etal. 107

Dated this 26th day of June, 1937.

CHARLES N. PRAY,

District Judge. [85]

Due personal service of within Citation made and
admitted, and receipt of true copy thereof acknowl-
edged this 26th day of June, 1937.

Attorney for Plaintiff
WELLINGTON D. RANKIN,
ARTHUR P. ACHER,

Attorneys for Clara Kohler.

Received July 1, 1937.

PAUL W. SMITH,
DAVID R. SMITH,
Attorneys for Defendant Clara Kohler.

[Endorsed] : Filed July 1, 1937. [86]

108 Daisy S. Kohler vs.

Thereafter, on July 19, 1937, Testimony to be in-
cluded in Transcript on Appeal was duly lodged in
the Clerk's office, being in the words and figures fol-
lowing, to-wit: [87]

[Title of District Court and Cause.]

TESTIMONY TO BE INCLUDED IN TRAN-
SCRIPT ON APPEAL.

Appearances :

H. W. Pitken, Des Moines, Iowa
J. G. Bowes, Des Moines, Iowa
Wellington D. Rankin, Helena, Montana

Attorneys for Plaintiff.

Paul W. Smith, Helena, Montana
David R. Smith, Helena, Montana

Attorneys for Mrs. Clara Kohler.
T. H. MacDonald, Helena, Montana

Attorney for Mrs. Daisy S. Kohler.

*'Mr. Arthur Acher on behalf of the plaintiff of-
fered in evidence plaintiff's Exhibit 1, which was
received in evidence without objection. (Said Ex-
hibit 1, a series of letters between the respective
parties prior to the institution of this action, will
be transmitted to the Circuit Court of Appeals in its
original form, and is hereby incorporated herein,
and by this reference made a part hereof.)

"MR. S. C. FORD

called as a witness for the plaintiff, being duly
sworn, testified as folows:

YoemenMut.LifeIns.Co.,etal. 109

(Testimony of S. C. Ford.)

Direct Examination
By Mr. Acher:

My name is S. C. Ford. I am a duly licensed and
practicing attorney — practicing in Helena, Mon-
tana; former Attorney General for the State and
former Associate [112] Justice of the Supreme
Court, and admitted to practice in all courts in
Montana, including the Federal Court.

The Court: Let the record show that he is one
of the ablest lawyers in Montana.

S. C. Ford: Thank you.

Mr. Acher: Judge Ford, in this action the plain-
tiff, insurance company, filed a Bill of Interpleader
under the Federal statute, setting forth that there
were two claimants to the policy of insurance — the
first wife and the second wife; the first wife being
divorced. Both being claimants, it was necessary
that the attorneys for the plaintiff obtain an order
of court from Judge Bourquin, then the Judge of
this District, granting permission to file the Bill of
Interpleader and ordering that process issue. There-
after the defendants appeared by motion to strike,
and an appearance was made in Court at that time.
Thereafter the defendants filed answers and cross-
complaints wherein they set up their respective
rights as against each other, and in their answers
they denied that the suit had been filed with reason-
able diligence, or the insurance company entitled to
attorneys fees, and alleged that the insurance com-

110 Daisy S. Kohler vs.

(Testimony of S. C. Ford.)

pany should pay interest on the sum of $2000, at
that time deposited in court, when the suit was filed.
Two replies were filed, one to each answer and cross
complaint. Thereafter the case come on for hearing
this day, and it was necessary that counsel for the
insurance company appear in this action — some
proof having been offered as to the proceedings that
had been had between the claimants and the insur-
ance company before the Bill of Interpleader was
filed; that is this correspondence that had led up
to the filing of the suit. In view of this fact, Judge,
what in your opinion would be a reasonable attor-
neys fee to be allowed to the plaintiff insurance com-
pany in this case?

A. I believe $250.00 would be a reasonable at-
torneys fee."

Thereafter witness E. G. Toomey and (\ A.
Spaulding attorneys-at-law testified to the same ef-
fect and fixed the sum of $250.00 as a reasonable fee.

MRS. DAISY S. KOHLER

called as a wdtness in her own behalf.

I am Dais}' S. Kohler one of the defendants in
this case, fifty-nine years old.

I was dependent on J. Victor Kohler at the time
of his death for support. At the time of the death
of J. Victor Kohler, I had an income from an in-
heritance from my mother which amounted to about
ten dollars per month.

YoemenMut.LifeIns.Co.,etal. Ill

(Testimony of Mrs. Daisy S. KoMer.)

From the time of my divorce from Mr. Kohler I
earned approximately $250.00 per year doing sub-
stitute work.

Between the time of my divorce and Mr. Koh-
lers death I supported [113] myself and children
the first year by working in a hat shop in California
for about six months at eighteen dollars per week.
Then my son sent for me to come to Spokane be-
cause work was getting hard for me at the time.
After the divorce I had two complete payments of
alimony. That was all then. Then there was for
several months that I didn't have any, after I went
to California. Then there was one time that I got
the alimony. I didn't have my mother's money then,
Mother didn't pass away till 1930.

In September 1930 I sold J. Victor Kohler my
half interest in the business and he gave me one
thousand dollars cash and a note for three thousand
dollars, that was to pay for one half of the l)usiness
he had given me ; he owed me at that time $1700.00
in alimony. I sold that back to him because he had
not paid the alimony. He couldn't pay because he
didn't have the money at that time.

From that time up to the time of his death I re-
ceived from him approximately fifty dollars per
month, outside of that and then $10.00 per month
from my Mother's estate I had nothing except when
I could find work myself.

My daughter is also Victor Kohler 's daughter, she
is twenty years old. I also at that time had a minor

112 Daisy S. KoJiler vs.

(Testimony of Mrs. Daisy S. Kohler.)
son. His father was to give me fifty dollars for him
and thirty dollars for the younger child who at that
time was between eleven and twelve years old — the
other child was between seventeen and eighteen —
that was to be paid outside of the alimony, but noth-
ing was paid at this time, I mean the fifty and thirty
dollars provided in the decree of divorce. I re-
ceived from Victor Kohler up to the time of his
death substantially the amount of fifty dollars per
month.

My youngest son did not haA^e work and I could
not support him, he did not have an education, so
he joined the marines. I gave my consent because he
was a minor, that was all that I could do.

The older children had college degrees, the
younger children would have gone to college if our
home had not been broken up. It was their father's
intention.

Clara Kohler, the other defendant, was consulted
with reference [89] to the property settlement. At
the time she had gone to Aberdeen, Washington. I
saw one letter of the correspondence between her
and J. Victor Kohler ^vith. reference to the property
settlement. I knew of one letter he wrote asking her
if she would agree to the terms. (Copy of that letter
identified and admitted in evidence)

YoemenMiit.LifeIns.Co.,etal. 113

(Testimony of Mrs. Daisy S. Kohler.)

Defendant Daisy S. Kohler 's

EXHIBIT No. 2.

''Jan. 17
"My dear Boy:

Your letter came this A. M. just before I left
for work. The eontence was carefully con-
sidered. I am very sorry to even think you
would ask me to sign such an obligation. You
know, Dear, that things happen when we are
least expecting it and attorneys can get by with
murder these days. No, I wouldn't for one mo-
ment have my children suffer for her selfish
desires. I seems if she cant get it all in one way
she must sceam another. You have done all
possible for your children and giving her part
should be enough. I want to not be tied to her
in any way or form when married to you. I
know the time draggs but after waiting for so
long and then be such a fool! No! never.

I would think after what has happened she
would be glad to go away and feel as tho she
was fortunate to get what she has. She may
think she is smart, but she has to go some to
beat me. I know her one failing.

The candy arrived yesterday, Darling, and as
I have found it will not do me any harm as to
my skin, I am certainly enjoying it. I want to
thank my thoughtful Darling for sending it
to me.

Lovingly yours,

Clara"

114 Daisy S. KoJiler vs.

(Testimony of Mrs. Daisy S. Kohler.)

Cross Examination
By Mr. Smith :

I did not come to Helena in September 1930 for
the purpose of selling the store. I came to see if I
could get some of the back alimony due me as I was
without money and living with my son, I talked io
your father, who was my lawyer at the time, and
both he and Mr. Schroeder told me that Mr. Koh-
ler's business was just about on the rocks, and
likely to be closed at any moment, and they would
advise me, if at all possible, to sell my one-half
interest in the store, thereby getting a little money,
because he had not been giving this to me. The busi-
ness w^as doing nothing — it was gone, and under
their direction I saw Mr. Kohler and he was agree-
able to the sale, and he asked me w^hat I wanted for
my interest and I said "$5,000". He said he would
give me $3,000.00. He later agi^eed to make $1,000
[90] payment in cash and gave me a $3,000 note.
They advised me to get out of the business so that
I would not be liable for one-half of the debts of the
business. At this time — We talked about the busi-
ness, but there wasn't any actual agreement. Before
the decree of divorce we just talked together, he
couldn't pay me any money and T.olile was worry-
ing him somewhat about this, and he asked me to
see if I could take Loble off his trail. He wanted me
to agree to take this $1,000 in cash and not insist
on this divorce alimony at that time, because he just
couldn't pay it, I knew he could not at that time,
because he just didn't have the money. He said if

YoemenMut.LifeIns.Co.,etal. 115

(Testimony of Mrs. Daisy S. Kohler.)
I would accept $50.00 a month as payment on the
note and let him free of the alimony that he would
continue to take care of the children and just as
soon as he got on his feet and the business built back
up, he said ''You know I will take care of you as
long as you live. Just take Lester Loble off my trail
and I will be glad to buy this business and as soon
as I can I will do all I can for you." That, of course,
was verbal. That is all there was to it.

Q. Along about September 9, 1930 did you not
agree that the insurance policy would be returned
to Mr. Kohler. Didn't you agree with him about
this at the store?

A. I certainly did not.

Q. Well, the insurance policy was discussed, was
it not?

A. Never. He never mentioned the insurance
policy at any time except the day he handed it to
me in Lester Loble 's office, and he said that it was
for my future protection. He said "I know that I
have earning power which you do not have, and T
know you can't earn as much as I can." That was
for my future protection and he never mentioned
the policy at any time after that. We never entered
into any agreement whatever, except that I stopped
insisting on having the alimony, and that he would
buy my part of the business. There was no refer-
ence made to the policy at all. Then or at any time.
In Mr. Schroeder's letter he said that Mr. Kohler
wanted the policy returned to him, which I [91]
refused to do, because he had given it to me and it

116 Daisy S. Koh ler vs.

(Testimony of Mrs. Daisy S. Kohler.)
was in the agreement in coiiii: that I was to have
that policy and he was to keep up the pa\Tnents.
There was never any mention of the policy between
Mr. Kohler and myself after that. The policy was
mine, given to me for my protection and it is mine
today. It has always been mine.

Mr. Schroeder wrote to me and asked me about
returning it, and then some time after that the in-
surance company asked me to turn it over and I
said I would not. As to my actual words, right now
I don't remember them. I refer to the Yeomans
Mutual Life Insurance Company.

Mr. Schroeder just was helping me with my real
estate. When he wrote to me about the house that
Mr. Hagler was renting, he also wrote about this
polic}^ He said Mr. Kohler had asked him to get it
for him.

EXHIBIT No. 3

for Clara Kohler admitted.

''March 7th, 1931
Mrs. Daisy S. Kohler,
611 Garden Ave.,
Coeur d' Alene, Idaho.
Dear Mrs. Kohler :

I was in Mr. Kohler 's store yesterday and he
asked about a life insurance policy which I be-
lieve he said was with the American Yeoman,
and he said he would like to have this policy
returned to him. I do not seem to remember
very much about this matter in connection with
your original deal with him.

Y omienMut.Lifelns. Co.,etal. 117

"Would you mind writing at your convenience
and tell me how this matter stands.

Very truly yours,
PGS M P. G. Schroeder"

EXHIBIT No. 5
for Clara Kohler admitted

''414 Powell Bldg.,
** Coeur D'Alene, Idaho

" March 10, 1931.

Dear Mr. Schroeder:

In regard to the insurance policy that Mr.
Kohler would like returned to him, I do not
feel that it is necessary to make any reply for
Mr. Kohler, but, to you, for your own personal
knowledge I wall be glad to tell you that Judge
Smith has the original contract, and it states
that the policy had been given to me, and that
Mr. K. was to keep up the pajnnents on it.

In view of the fact that I helped equally
with him to pay for the policy for 30 yrs. and
for my childrens rights, as ^vell as mine, I [92]
do not see that it is right for me to give it to
Miss Hardie.

She no doubt \\\\\ outlive us both, and I be-
lieve the children should have the benefits, and
that just brings a question to my mind. Would
my children benefit by the policy if I were to
die before Mr. K.

I suppose if I refuse to give him the policy
he will stop the payments.

I would be glad to have your advice in this
matter, wish I were near enough to talk it over

118 Daisy S. Kohler vs.

(Testimony of Mrs. Daisy S. Kohler.)

with you as I am not let me assure yon again,
Mr. Schroeder that I am eternally grateful for
all of your kindness.

Sincerely yours,
DAISY S. KOHLER".

and in reply to that letter Exhibit 6 for Clara Koh-
ler is a follows:

''March 24th, 1931
Mrs. Daisy S. Kohler,
414 Powell Bldg.,
Coeur d'Alene, Idaho
Dear Mrs. Kohler:

I talked \dih Judge Smith about tlie life in-
surance policy and he brings up several points
which may be of interest. For one thing we all
know that with an assessment company the in-
sured can very quickly lose all rights under
the policy and have it declared void by non-pay-
ment of the stated assessment. Then the matter
of the terms and conditions as outlined in the
policy.

With a fraternal policy it would pr()ba])ly
be found references made to the constitution
and by laws, so before any one can really learn
very much about what can or what cannot be
done, it is necessary to read all of these things.

Judge Smith suggests that under some condi-
tions he has known of a fraternal body, what-
ever its name is, entirely refuse to pay a loss
on a policy when the beneficiary of record is no

YomienMut,LifeIns.Co.,etdl. 119

(Testimony of Mrs. Daisy S. Kohler.)

longer living at the time of the death of the in-
sured. He says further that he doubts whether
this company would pay a loss to you now that
the insured has another wife. The policy prob-
ably emphasizes the fact that the next of kin
would be recognized and you being removed
from this situation, there is grave doubt in his
mind whether you would ever realize anything
from the policy.

The suggestion, therefore, is that you read
all these documents carefully and see w^hat light
may be thrown on the subject.

With best personal regards, I remain
PGS M Very truly yours,

And

EXHIBIT 4

for Clara Kohler is the answer to that letter.

"Coeur d'Alene, Idaho,

April 7th, 1931.
Mr. P. G. Schroeder,
Helena, Montana
Dear Mr. Schroeder: [93]

Your letter regarding the insurance followed
me over to Pullman where I was supplying for
two weeks and back here, so that I have only
had it a few days.

The Yoeman Lodge here advise me to write
to the home office and give them certain in-
formation w^hich I do not possess so I am reply-

120 Daisy S. Kohler vs.

(Testimony of Mrs. Daisy S. Kohler.)

ing on your generosity again to ask if you will
find out for me in what public record our agree-
ment, at time of divorce, is recorded.

The lodge here seem to think inasmuch as
Mr. Kohler mentioned giving me the Yoemen
polic}^ and saying that he would keep it up for
me in his agreement might make it valid.

They suggest that I know just where this
agreement is recorded, number of pages, et^.,
so that I can give this information to the head
office when I write.

I believe Judge Smith has this agreement to,
if you cared to look at it.

Would it not be a good idea to ask Mr. Berry,
living over the Auditorium who is secretary
for the Yoeman there, if Mr. Kohler has kept
up his payments or perhaps you know this from
Mr. Kohler himself.

In my reply to your letter before, perhaps I
was a little rude in my reply to be given Mr.
Kohler, I really do not want to be anything
but kind to him, but I remember at the mo-
ment I read your letter I felt that he was try-
ing to take the little I had away from me, and
I was bitter for the moment, but now I realize
he cannot take any eternal good from me, and
that is all that counts, so if you think I should
give him an answer, you may say I am thinking
it over.

Yoe^nenMut.LdfeIm.Co.,etal. 121

(Testimony of Mrs. Daisy S. Kohler.)

I will be very grateful for this information,
Mr. Schroeder.
With best wishes,

Sincerely yours,
DAISY S. KOHLER.

The interest on the note Mr. Kohler gave me
was given me each month with the $50.00, whatever
it happened to be. I don't remember the exact
amount.

I was to get $3,500 according to Mr. Kohler out
of the Hagler mortgage but all I got was $1,700.00.
It was not quite $1,700— nearer $1,600, $1,675.00 or
something like that.

I did not get $780.00 out of the Mason agreement.
There wasn't any lump sum, but I couldn't tell you
just how much. I think $25.00 a month — but I don't
remember for how long.

Q. Did you get the Buick car, which was re-
ferred to.

A. He promised me an automobile — promised to
have one delivered by a certain date; that was in
the court agreement, but, of course, that was at a
time when he didn't have any money. He asked me
not to press him too hard until he got on his feet —
that he would do all that he could for me when he
[94] got the business going again. Of course, I never
got the car, and really never did expect it. I did
at the time of the agreement, but I didn't after so
much time had gone by.

122 Daisy S. Kohler vs.

(Testimony of Mrs. Daisy S. Kohler.)

He paid my fare to Connecticut to visit my
daughter, who was having an operation.

He sent me to California to live and sent our
goods down there and paid the freight. He said
that he was coming there with me the first of
June and he sent me do\ATi, and I was to put the
children in school. I rented a small furnished apart-
ment at first, and then he sent the furniture and
promised to be there by the first of June, but when
the first of June came he didn't come.
Q. That is all.

Redirect
By Mr. MacDonald.

I wrote the Yoemans Insurance Company about
this contract.

Q. About the time of your correspondence with
Mr. Schoreder.

A. Well, no, it was quite a little bit after that.
I don't remember. Maybe one or two months, be-
fore I had a letter from the company saying that
Mr. Kohler was going to change the beneficiary,
and would I please return the policy. I wrote back
and said ''No, I would not send the policy, because
it had been given to me in a court agreement", and
then I had another letter from the company.

Mr. MacDonald : Just a moment.

The Court: Ijct her finish.

A. They advised me to hold the policy as they
said the law might be changed. The Yoeman Com-
pany themselves told me to hold the policy, saying

YoemenMut.LifeIns.Co.,etdl. 123

(Testimony of Mrs. Daisy S. Kohler.)
they hoped to change the law, and if they did that
I would have no trouble in getting my money.
Mr. MacDonald: (reading)

''Mrs. Daisy S. Kohler
414 Powell Bldg.,
Coeur d'Alene, Idaho

Dear Madam:

We have referred your letter of April 21st
to our General Counsel, Mr. H. W. Pitkin. [95]
He suggested that we advise you that we are
now attempting to secure a change in the laws
regarding the payment of the benefits of a
certificate to a divorced spouse. In his opinion,
this change will probably be made in the laws
within the next two years and his suggestion
is that you allow the beneficiary to stand on
this certificate as it now is as under the new
law, which we are trying to have passed, a
divorced husband or wife may secure the bene-
fits of a certificate.

Fraternally yours,
THE BROTHERHOOD OF AMERICAN

YOEMEN
By: GEO. F. WALL,
AB: Secretary"

Cross Examination
By Mr. Acher for plaintiff.

I have lived in Montana for some forty years,
Mr. Kohler was a resident of this county and his

124 Daisy S. Kohler vs.

(Testimony of Mrs. Daisy S. Kohler.)
estate was probated here. Miss Hardie referred to
became Mrs. Clara Kohler. I think I saw the letter
which you are referring to.

Letter to Spokane attorneys admitted without
objection.

(EXHIBIT 8).

''November 17, 1933
Nuzmn & Nuzum
Attorneys at Law
Columbia Building
Spokane, Wash.

Re: DC 14428— James Victor Kohler

Gentlemen :

Last siunmer we wrote you a letter stating
that we were ready and willing to pay the sum
due, to-wit : $2,000.00 if it could be decided who
was the proper beneficiary so that the company
might be relieved of all responsibility. We
stated to you at that time that Attorney Paul
W. Smith, Penwell Block, Helena, Montana,
represented Mrs. Clara Kohler.

We have been waiting since that date for
some reply as to whether the parties interested
could come to some agreement in regard to how
the proceeds would be paid. We will wait a few^
days longer and unless w^e hear from you, we
will file a bill of interpleader under the Federal
Interpleader statute and let the court determine
the proper party to whom the benefits should

YoemenMut.LifeIns.Co.,etdl. 125

(Testimony of Mrs. Daisy S. Kohler.)

be paid. We are also writing the attorney at
Helena again.

Very truly yours,
JGB:b Ass't to General Counsel."

The Court: Any further examination.
Mr. Acher: I think not. We have no further evi-
dence to introduce.

MRS. CLARA KOHLER

as witness in her own behalf.

Direct Examination
By Mr. Smith:

I am Clara Kohler, defendant herein, wife of
J. Victor Kohler at time of his death May 9th, 1933,
and named in application for change of beneficiary
and referred to in evidence herein. [96]

I recall seeing Daisy S. Kohler September 9th,
1930 in Helena, Montana, in Kohler 's Art Store
Mr. Kohler and myself being present. I recall a
conversation between Mr. Kohler and Daisy S.
Kohler about the Yeoman policy. At that time, they
were trying to make some kind of agreement or
settlement and Mr. Kohler asked her to give up the
policy and she agreed to do so if he would give her
one thousand dollars in cash. The one thousand dol-
lars was paid. It was my money. I paid the $1000
because I felt that we would get the policy back
and have some protection, Mr. Kohler was not well

126 Daisy S. KoJiler vs.

(Testimony of Mrs. Clara Kohler.)
at the time. The business was not good at that-
time. I paid the premiums on the insurance policy
after September 9, 1930, my money was used. The
premiums were made up to the time of his death.
I made the payments because the business was bad
and I had a little money of my owni and I used
it for the payments. I claim the benefits under the
policy. I was not present at any other meetings as
they had most of their meetings away from the
store.

Cross Examination
By Mr. MacDonald:

The money I speak of was not paid until the
17th. There was no agreement for the sale of the
store at that time, they could not come to any agree-
ment. Daisy had Mr. Smith draw up different papers
as Victor w^ould not sign any of them as they were
not what he wanted. It was releasing her from her
part of the store.

Witness identifies bill of sale for store which is
admitted in evidence

EXHIBIT 9.

''Know All Men By These Presents, That I
Daisy Kohler, of the City of Helena, County of
Lewns and Clark, State of Montana, the party
of the first part for and in consideration of one
dollar ($1.00) lawful money to me in hand paid
by J. Victor Kohler of the said City of Helena,
the party of the second part, the receipt where-

YoemenMut.LifeItis.Co.,etal. 127

(Testimony of. Mrs. Clara Kohler.)

of is hereby acknowledged, do by these presents,
grant, bargain, sell and convey unto the said
party of the second part, his executors, ad-
ministrators and assigns, an undivided one-
half interest of, in and to the goods, wares,
merchandise, fixtures, accounts and good will of
the Kohler Art Store, and an undivided one-
half interest of, in and to the goods, wares,
merchandise, fixtures, accounts and good will
of the Kohler Mortuary, being all my interest
in and to said Kohler Art Store located at
No. 3 North Main Street in said City of Helena
and Kohler Mortuary located at No. 4 Jackson
Street, in said City of Helena, and all prop-
erty pertaining thereto, subject to all existing
liabilities against said business and each there-
of the said party of the second part by accept-
ing this bill of sale assumes and agrees to pay
all of said liabilities and agrees to save the
said party of the first part harmless of and
free from the payment of the same or any part
thereof, the party of the first part never hav-
ing participated in contracting any of said lia-
bilities and never having assumed any respon-
sibility thereof. [97]

To have and to hold the same, to the said
party of the second part, his executors, admin-
istrators and assigns forever.

128 Daisy S. Kohler vs.

(Testimony of Mrs. Clara Kohler.)

In witness whereof, I have hereunto set my
hand and seal the ninth day of September
1930.

[Seal] (Signed) DAISY KOHLER

This is not the agreement on which the one
thousand dollars was paid, that is just the bill of
sale. It was not for the sale of the store that the
one thousand dollars was paid it was for the whole
agreement.

I was present at the conversation between Victor
and Daisy Kohler with reference to the insurance
policy. I was standing at the counter in the store.
They were standing about twenty feet from me on
the other side. They were talking so I could hear.
They were not talking to me they were talking to
each other. Of course I was not in the conversa-
tion but it was all right for me to hear, they laiew
I could hear. I was interested being the wife.
I don't think I mentioned it to any one. Mr.
Schroeder came up to the store with Mr. Kohler
to get the thousand dollars. We did mention that
this was in full settlement of the agreement that
was made beforehand. Mr. Kohler and Mr. Schroe-
der were there, Mrs. Kohler was not there.

The Court: What I want to know is, was Mr.
Schroeder acting as Daisy S. Kohler 's agent in
getting the money?

Mr. Schroeder was really friendly toward the two
of them. He was trying to help them come to some

YoemenMwt.LifeIns.Co.,etal. 129

(Testimony of Mrs. Clara Kohler.)
agreement or settlement. They knew Mr. Kohler
could not live up to that first agreement. He
just didn't have the money. Well, I cannot say
there was such bad feeling between me and Daisy
S. Kohler in September 1930.

Examination by Mr. Acher

''That is Mr. Kohler 's signature which you show
me on Exhibit 'C attached to the complaint, dated
in March, 1932, when the affidavit was sent into the
company. Later I received a duplicate policy, and
after Mr. Kohler 's death I sent in that duplicate
policy to a banl^ in Iowa with proof of loss. Attor-
ney Paul W. Sniith received a letter back that they
could not take the proofs in that way. Then the
papers came back and my attorney sent in the
papers without the policy [114] direct to the com-
pany. I know that the company was at all times
willing and ready to pay the money, but did not
know who was entitled to it. They never refused
to pay.

The Court: Where is the second policy now?

"A. So far as I know both were sent to the
company.

"Mr. Smith: I think it is admitted in the plead-
ings that I have the second policy here.

"The Court: This second policy should be iden-
tified and put in the record. Let the record show
that the second policy issued by the plaintiff com-
pany to the deceased Kohler was received by Mrs.

130 Daisy S. Kohler vs.

(Testimony of Mrs. Clara Kohler.)
Clara Kohler's attorney, and that it was marked
Exhibit No. 10 for the defendant Mrs. Clara Kohler.
Let the record show that it was admitted without
objection. I shall expect somebody to produce the
by-laws and constitution, in force at the time the
policy was issued. And all amendments and addi-
tions, if any; the application for membership, the
medical examination, etc., in other words, I shall
expect to have produced here those things that are
specified in Section 6316 of the Revised Codes of
Montana.

Proceed: ''Exhibit 10 is by this reference made
a pai-t hereof and the original exhibit wil be trans-
mitted to the Circuit Court of Appeals.

' ' Mr. Acher : So far as you know the oral agree-
ment that you have testified to was never called to
the attention of the insurance company?

''A. No."

PHILIP SCHROEDER

was called on behalf of Clara Kohler.

My name is Philip Schroeder, Residence, Helena,
Montana, am in the real estate business. I know
Daisy S. Kohler, Clara Kohler and knew J. Victor
Kohler in his lifetime. I recall a conversation with
Daisy S. Kohler and J. Victor Kohler in September
1930. The purpose of the meetings was the [115]
settlement of the differences between J. Victor

YoemenMut.LifeIns.Co.,etal. 131

(Testimony of Philip Schroeder.)
Kohler and Daisy S. Koliler — the contracts or
agreements which in this case were all mostly ali-
mony settlements — the ones entered into at the time
of their divorce.

Mr. Schroeder: Mrs. Kohler, Daisy Kohler,
came to my office and explained that she was having
great difficulty in securing payments under this
alimony agreement and asked for my suggestions
as to what might be accomplished to secure her
payments under this contract from J. Victor Kohler.
This resulted in conferences between Mrs. Daisy S.
Kohler and J. Victor Kohler. These conferences
were some times held in the office of J. Miller Smith
and some times at Brady's office. He was a public
accomitant. Brady was called in to make an audit
of Kohler 's business affairs. The object of this was
to determine whether or not it was possible to get
Mr. Kohler to meet some of these conditions in the
alimony agreement. The financial statement made
by Mr. Brady indicated that Mr. Kohler's affairs
were not in good condition at all and it seemed
almost useless to expect him to continue to comply
with the terms of this agreement. I suppose a half
dozen or more meetings were held and it finally re-
sulted in an offer and acceptance by Mr. Kohler of
a settlement of $4,000— $1,000 of that to be in cash.
A note was given for the balance of $3,000.00.

The Court: Who were you acting for. Daisy S.
Kohler or J. Victor Kohler.

132 Daisy S. Kohler vs.

(Testimony of Philip Schroeder.)

A. Something had to be done — I was friendly
toward both Daisy S. Kohler and J. Victor Kohler.
I could talk to them where they were unable to talk
to each other — make suggestions, etc. I was friendly
toward both of them, there was no business inter-
est at all.

Mr. Smith: Was the Yeoman's insurance policy
mentioned.

A. So far as I recall I never heard the question
of the life insurance policy mentioned but once and
at that time Daisy Kohler told me that she had in
her possession this life insurance policy, explaining
that it w^as a fraternal concern and she asked me if
she should not keep it. I suggested that perhaps
that policy was of very little value, for two or three
reasons — one was that Mr. Kohler could discontinue
the premium payments and the other that Kohler 's
own life expectancy might be 20 or 30 years, and
also that the fraternal [99] association might not
last as long as he lived. So I suggested to her that
she just drop the insurance matter and say nothing
more about it. That is the only time I ever heard
the matter mentioned at all. They, themselves, might
haA^e talked it over at times, but I heard of it only
once, just as I said. The $1,000.00 was handed to me
along mth the note — the note and check for $3,000. 1
had no knowledge of whose money it was. It was a
cashier's check issued by the Union Bank, so it did
not indicate w^hose money it was, or from what
source it came. I could not say to whose order it

YoemenMut.Lifel7is.Co.,etal. 133

(Testimony of Philip Schroeder.)
was payable, but I take it for granted that it must
have been to Daisy S. Kohler, so I would have to
answer that it was Daisy S. Kohler. The note was
not signed by Clara Kohler. I seldom, if ever, talked
with Clara Kohler. She was always in the back
ground. All negotiations were with J. Victor Kohler.
The $1,000 was part payment, along with the note.

The Court : What was this part payment for.

Mr. Kohler acknowledged an indebtedness of
$4,000. He said he could not pay the $4,000 in cash,
but he could pay $1,000 in cash, and he said ''I
can give you and will give you a note for $3,000 pay-
able on a monthly payment plan. That was intended
to be a settlement of all these matters described by
an agreement known as an alimony agreement.

The Court: In other words, it was in settlement
of the alimony agreed on.

That was my understanding.

Cross Examination

By Mr. MacDonald:

The note is dated September 9th and the check
which Mr. Kohler gave was delivered on the 17th,
so it would be safe to say that the matter was finally
settled and closed on the 17th of September. Mr.
Kohler signed the note and delivered the check. De-
livery was made in the Kohler Store.

The Court : Who was there at the time of delivery.
Who was the note delivered to.

134 Daisy S. Kohler vs.

(Testimony of Philip Schroeder.)

A. Mr. Kohler and myself. I don't recall that
Daisy Kohler was there or not. I think not. The
check was delivered to me and taken to J. Miller
Smith's office by myself.

Q. I delivered it to J. Miller Smith. I could not
say if Daisy Kohler was there at the time. J. Miller
Smith was Daisy Kohler 's lawyer. [100]

Referring to Exhibit A this is the bill of sale from
Daisy S. Kohler to J. Victor Kohler of an undi-
vided one-half interest in the mercantile business.
They were delivered at the same time — part of the
same transaction.

I acted for neither Victor nor Daisy S. in one
sense. I was friendly with the both of them and
acted as a go-between.

Q. This agreement was finally made upon this
particular sum of money.

A. In Judge Smith's office, and I then went to
Mr. Kohler 's store and repeated this proposal that
he pay $4,000, having in mind also that the sum of
money must be within Mr. Kohler 's ability to pay,
and it was thought mider the circumstances that
Mr. Kohler never could meet any obligation greater
than this $4,000.00. Mr. Kohler accepted that pro-
posal when I went up to his store and told him
about it.

Q. Do you know exactly what the agreement was.

A. Well, as near as anyone; it apparently was
not reduced to writing, at least not to my knowl-
edge. My understanding of the negotiations and

YoemenMut.Lifel7is.Co.,etal. 135

(Testimony of Philip Schroeder.)
conversations was that owing to the fact that the
alimony agreement was so burdensome and could
not possibly be complied with, this agreement was
to supercede that whole agreement, and this was to
be a new one.

Q. When, definitely, did Daisy Kohler agree to
that arrangement.

A. Well, it was just an accummulation of a half
dozen meetings. I couldn't put my finger on any
particular minute. The agreement was entered into,
however, to the effect that Mrs. Kohler was to sell
to J. Victor Kohler her one-half of the Kohler Art
Store and Kohler Mortuary. That was embodied in
the bill of sale. And that bill of sale is here in evi-
dence. It was part of the negotiations — the bill of
sale.

The Court: To clarify the record. Do you not
state that the purpose of that bill of sale was to
prevent Mrs. Daisy S. Kohler from becoming liable
for the debts of the business.

A. That was an inducement, I suppose.

The Court: To be exact, wasn't that bill of sale
given for the purpose of preventing any such lia-
bility on her part. [101]

Mr. MacDonald: Your Honor, we have no such
record in evidence. She stated she wanted to sell
the business . . .

The Court: Yes, she stated that was one of the
reasons that she wanted to sell the business. She was
advised by Mr. Schroeder that she should do so.

136 Daisy S. KoJiler vs.

(Testimony of Philip Schroeder.)

Mr. MacDonald: I don't remember any such
statement.

The Court: It was made, Proceed.

The bill of sale was a part of the general settle-
ment: it was subsequent to the negotiations. Mrs.
Kohler deeded this one-half interest in the mercan-
tile business to Mr. Kohler and Mr. Kohler in turn
paid by note and check in the sum of $4,000.00 —
$1,000 in cash and note for $3,000.00. The main ob-
ject in making this bill of sale and in getting Mr.
Kohler to accept it w^as so that she might be re-
lieved of any further financial responsibility in the
event of bankruptcy — if that makes it clear.

The Court: That is clear.

Mr. MacDonald: That is all.

Rebuttal

MRS. KOHLER (DAISY S.)

I never did have any agreement with J. Victor
Kohler in September 1930 with reference to my
turning over to him the insurance jDolicy in ques-
tion in this case. Mr. Kohler never mentioned the
policy to me. I heard the testimony of Clara Kohler
with reference to your having a conversation with
Victor Kohler in the store in September 1930 at
which it was agreed to return to him the policy in
question. Such a conversation did not take place. I
never mentioned the policy to him nor he to me at
any time. I knew nothing about it until Mr.

YoemenMut.LifeIns.Co.,etal. 137

(Testimony of Mrs. Daisy S. Kohler.)

Schroeder wrote me. The court can see by my letter.

' * The Court : Until the Court is put in possession
of all the necessary papers in this case, including
the application for insurance, by-laws and consti-
tution of the plaintiff company and any amend-
ments thereto, the medical examination of the in-
sured, signed by the applicant, the Court will with-
hold a decision. The Copy of the by-laws should be
signed by the secretary or corresponding officer
under the seal of the plaintiff company.

''The Court: Let the record show that the consti-
tution and by-laws and any changes or amendments
thereof are to be delivered to the Court by the
counsel for the plaintiff with the certificate [116]
of the secretary of the society under the seal of the
plaintiff here to the effect that they are the by-laws
and constitution in force at the time of the issuance
of the first policy, at the time of the issuance of the
second policy, and at the time of the death of the
deceased Kohler. What time do you wish to have to
present your findings of fact, and conclusion of
law."

MR. PAUL W. S]\rTTH

called as a witness for the plaintiff, being duly sworn
testified as follows:

"My name is Paul W. Smith. I acted as attorney
for Mrs. Clara Kohler in negotiations between her
and the insurance company before this Bill of

138 Daisy S. Kohler vs.

(Testimony of Paul W. Smith.)
Interpleader was filed. Upon your showing me Ex-
hibit I which has already been admitted in evidence,
I recall writing the letter on November 20th to the
Insurance company, which suggests that a suit in
interpleader should be filed. I recall receiving a
letter from the insurance company, which is set
forth as Exhibit 11. (Whereupon Exhibit 11 was
offered in evidence without objection and is herein
by this reference made a part hereof, the original
thereof to be transmitted to the Circuit Court of
Appeals.

^'Q. This is identical with Exhibit 8, which has
been read, addressed to the attorneys in Spokane,
Washington, to the effect that the suit would be
filed if tho}^ could not come to an agreement. Now,
Mr. Smith, in Exhil)it 1, the letter from The Yeo-
man Mutual Life Insurance Company on June 29th,
discussing this matter, they say:

"We understand that her (Daisy S. Kohler) claim
is based upon a property settlement between Daisy
Kohler and Victor Kohler, executed February 20,
1929.

"We do not have a copy of this decree nor do we
know whether, if the same is as we have been ad-
vised, the court can enforce it.

Q. You never sent them a copy.

A. No.

Q. You never sent them any statement of the
new agreement, did you.

A. Not that I recall."

YoemenMiit.LifeIns.Co.,etal. 139

Thereafter, pursuant to the aforesaid order of the
court on February 11, 1936, the plaintiff filed in the
above entitled action certified copies of certain
documents referred to in the certificate of the Judge,
which said documents are by this reference made a
part hereof, the original exhibits to be transmitted
to the circuit court of appeals.

It is stipulated that the foregoing may be settled
and certified to as the testimony in narrative form
essential to the appeal herein.

WELLINGTON D. RANKIN
ARTHUR P. ACHER

Attorneys for Plaintiff.
PAUL W. SMITH
DAVID R. SMITH

Attorneys for Defendant
Clara Kohler.
T. H. MacDONALD

Attorney for Defendant
Daisy S. Kohler. [117]

CERTIFICATE.

The undersigned, James H. Baldwin, L^nited
States District Judge, in and for the District of
Montana, and the Judge before whom said cause
was tried, hereby certifies that the foregoing is a
true and correct narrative statement of the evidence
in the above entitled cause, other than exhibits as
follows :

140 Daisy S. Kohler vs.

Exhibits Nos. 1, 10, and 11.

11 certified copies of the Constitution and
By-Laws of the plaintiff corporation dating
from 1901 to 1932, inclusive, issued as follows:
1901, 1906, 1909, 1913, 1917, 1921, 1924, 1925,
1928, 1929, 1932, together with Book on laws of
Iowa relating to insurance issued in 1921 and
book on the laws of Iowa relating to insurance
issued in 1931, together with photostatic copies
of papers as follows: photostatic copy of the
application for membership and medical ex-
amination which was filled out in 1900; photo-
static copy of specimen certificate like that
which was issued to the insured in May 1900;
photostatic copy of the application for ex-
change of certificate, that is, from the certifi-
cate issued in 1900 for the one issued in 1923
and the one that is at issue in this case ; certifi-
cate issued July 26, 1923 ; application for change
of beneficiary; application for duplicate benefit
certificate dated March 5, 1932; photostatic
copy of the certificate which was re-issued on
March 10, 1932, in which an application for
change of beneficiary shows that the insured
designated Clara Kohler — attached to said cer-
tificate will also be found the application for
duplicate benefit certificate ; photostatic copy of
the proofs of death submitted by Mrs. Clara
Kohler; photostatic copy of proofs of death
submitted by Daisy S. Kohler ;

referred to in said statement and incorporated
therein by reference ; and it appearing to the Court

YoemenMut.LifeIns.Co.,etal. 141

necessary and proper that the aforesaid original ex-
hibits should be inspected in the Circuit Court of
Appeals upon the appeal herein;

It Is Ordered, that the foregoing exhibits incor-
porated in the statement of the evidence by refer-
ence be transmitted by the Clerk of this Court to
the Clerk of the Circuit Court of Appeals at San
Francisco, California, and returned after the dis-
position of said appeal to the Clerk of this Court,
and that the foregoing statement be, and the same
is, by me, now duly settled, allowed and approved as
the statement of the evidence in the above entitled
cause.

Dated this day of August 1937.

District Judge.

Received by the Clerk and filed this April 30,
1938.

C. R. GARLOW,

Clerk. [118]

Thereafter, on April 30, 1938, a Stipulation in re
substitutions and additions to the Proposed State-
ment of Evidence was received by the Clerk and filed
herein, being in the words and figures following,
to-wit: [110]

142 Daisy S. Kohler vs.

[Title of District Court and Cause.]

STIPULATION.

It is stipulated that the attached pages may be
substituted for pages in the original "proposed tes-
timony to be included in transcript on appeal" as
follows :

1 and la for page 1; 11 and 11a for page 11; 15
and 16 for page 15 (the latter stipulating to the
correctness of the entire document) and that the
words "I think I saw the letter which you are re-
ferring to" (referring to exhibit B) to be inserted
after the words "Clara Kohlor'' <ni line 11 of pp.go 9
and the words " (Exhibit 8) " after line 12 on page 9
and that the original "proposed testimony" when so
amended may be certified by the Court.

WELLINGTON D. RANKIN
ARTHUR P. A(^HER

Attorneys for Plaintiff.
PAUL W. SMITH
DAVID R. SMITH

Attorneys for Defendant
Clara Kohler.
T. H. MacDONALD

Attorney for Defendant
Daisy S. Kohler.

[Clerk's Note: The pages referred to in the above
stipulation have been incorporated in tlie testi-
mony.] [Ill]

YoemenMiit.LifeIns.Co.,etdl. 143

Thereafter, on July 19, 1937, Praecipe for Tran-
script of Record was duly filed herein, being in the
words and figures following, to-wit: [103]

[Title of District Court and Cause.]

PRAECIPE FOR TRANSCRIPT OF RECORD.

To the Clerk of the United States District Court,
for the District of Montana:

Please prepare a record for the purpose of an ap-
peal to the United States Circuit Court of Appeals
for the Ninth Circuit, and include the following :

(1) Findings of fact, conclusions of law and
order of the court.

(2) Decree of the court.

(3) Assignment of errors.

(4) Appeal.

(5) Allowance of appeal.

(6) Cost bond.

(7) Citation on appeal.

(8) This praecipe.

(9) Testimony.

All captions and indorsements may be omitted,
and you are requested to forward typewritten tran-
scripts to the United States Circuit Court of Ap-
peals for the Ninth Circuit, in accordance with the
rules of this court.

T. H. MacDONALD

Solicitor for Defendant,
Daisy S. Kohler.

144 Daisy S. Kohler vs.

Personal service of within Praecipe made and ad-
mitted, and receipt of true copy thereof acknowl-
edged this 17th day of July, 1937.

WELLINGTON D. RANKIN
ARTHUR P. ACHER

Attorneys for Plaintiff.
PAUL W. SMITH &
DAVID R. SMITH

Attorneys for Clara Kohler.

[Endorsed] : Filed July 19, 1937. [104]

Thereafter, on April 16, 1938, Certified copy of
Order of the United States Circuit Court of Ap-
peals, Ninth Circuit, continuing motions and ex-
tending time to file Transcript was duly filed
herein, being in the words and figures following,
to-wit: [105]

At a Stated Term, to wit: The October Term
A. D. 1937, of the United States Circuit Court of
Appeals for the Ninth Circuit, held in the Court
Room thereof, in the City and County of San Fran-
cisco, in the State of California, on Tuesday the
Twelfth day of April in the year of our Lord one
thousand nine hundred and thirty-eight.

YoemenMut.LifeIns.Co.,etal. 145

Present :

Honorable Curtis D. Wilbur, Senior Circuit
Judge, Presiding,

Honorable William Denman, Circuit Judge,

Honorable Clifton Mathews, Circuit Judge.

No. 8812.

DAISY S. KOHLER,

Appellant,
vs.
CLARA KOHLER,

Appellee.

ORDE'R CONTINUING MOTIONS, AND
EXTENDING TIME TO FILE TRANSCRIPT.

Upon consideration of the motion of appellee,
filed April 4, 1938, for dismissal of the appeal herein
for the non-compliance by the appellant with the
provisions of Subdivision 1 of Rule 16 of the Rules
of Practice of this Court, and of the motion of ap-
pellant, filed April 11, 1938, for denial of said mo-
tion, and further relief, and good cause therefor
appearing.

It Is Ordered that said motions be, and they
hereby are continued; and

It Is Further Ordered that appellant herein be,
and hereby is granted to and including May 12,
1938, within which to file with the clerk of this
court a certified transcript of record in above cause.

[106]

146 Daisy S. Kohler vs.

I Hereby Certify that the foregoing is a full,
true, and correct copy of an original Order made
and entered in the within-entitled cause.

Attest my hand and the seal of the United States
Circuit Court of Appeals for the Ninth Circuit, at
the City of San Francisco, in the State of Califor-
nia, this 12th day of April, A. D. 1938.

[Seal] PAUL P. O'BRIEN,

Clerk, U. S. Circuit Court of
Appeals for the Ninth Circuit.

[Endorsed] : Filed April 16, 1938.

Thereafter, on April 19, 1938, Second Praecipe
for Transcript of Record was duly filed herein, in
the words and figures following, to-wit : [107]

[Title of District Court and Cause.]

SECOND PRAECIPE FOR TRANSCRIPT OF

RECORD.

To the Clerk of the United States District Court
for the District of Montana:

Please prepare and forward a record for the pur-
pose of an appeal to the United States Circuit Court
of Appeals for the Ninth Circuit, and include the
following :

All papers mentioned in the original *' Praecipe
for transcript of record" filed herein and in addi-
tion thereto the "stipulation" of all parties hereto
to be attached to the evidence to be used on the ap-
peal and making the substitutions and additions to
the original "proposed evidence" as provided in

YomienMut.LifeIns.Co.,etal. 147

said stipulation and a copy of the ''order of the
Circuit Court of appeals for the ninth Circuit"
dated April 12th, 1938, and this praecipe.
Signed T. H. MacDONALD

Attorney for Defendant
Daisy S. Kohler. [108]

Copy had and service admitted this 19th day of
April 1938.

W. D. RANKIN
A. P. ACHER

Attorney for Plaintiff.

Copy had and service admitted this 19th day of
April 1938.

PAUL W. SMITH
DAVID R. SMITH

Attorney for Defendant
Clara Kohler.

[Endorsed] : Filed April 19, 1938. [109]

CLERK'S CERTIFICATE TO TRANSCRIPT
OF RECORD.

United States of America,
District of Montana — ss.

I, C. R. Garlow, Clerk of the United States Dis-
trict Court for the District of Montana, do hereby
certify and return to the Honorable, The United
States Circuit Court of Appeals for the Ninth Cir-
cuit, that the foregoing volume, consisting of 118
pages, numbered consecutively from 1 to 118 inclu-

148 Daisy S. Koliler vs.

sive, is a full, true and correct transcript of all por-
tions of the record and proceedings in case No. 1494,
Yeomen Mutual Life Insurance Company, etc., vs.
Mrs. Clara Kohler, et al., which have by praecipe
been designated to be incorporated into said tran-
script, as appears from the original records and
files of said court in my custody as such Clerk ; and
I do further certify and return that I have annexed
to said transcript and included within said pages
the original Citation issued in said cause.

I further certify that the costs of said transcript
of record amount to the smn of Twenty and 95/100
Dollars, and have been paid by the appellant.

Witness my hand and the seal of said court at
Helena, Montana, this May 7th, A. D. 1938.

[Seal] C. R. GARLOW,

Clerk.
By H. H. WALKER

Deputy. [119]

[Endorsed]: No. 8812. United States Circuit
Court of Appeals for the Ninth Circuit. Daisy S.
Kohler, Appellant, vs. Yeoman Mutual Tjife Insur-
ance Company and Clara Kohler, Appellees. Tran-
script of Record. Upon Appeal from the District
Court of the United States for the District of Mon-
tana.

Filed May 12, 1938.

PAUL P. O'BRIEN,

Clerk of the United States Circuit Court of Appeals
for the Ninth Circuit.

YoemenMut.LifeIns.Co.,etal. 149

At a Stated Term, to wit: The October Term A. D.
1937, of the United States Circuit Court of Appeals
for the Ninth Circuit, held in the Court Room
thereof, in the City and County of San Francisco,
in the State of California, on Monday the sixth day
of June in the year of our Lord one thousand nine
hundred and thirty-eight.
Present :

Honorable Curtis D. Wilbur, Senior Circuit
Judge, Presiding,

Honorable William Denman, Circuit Judge,

Honorable Clifton Mathews, Circuit Judge.

No. 8812.

DAISY S. KOHLER,

vs.
CLARA KOHLER,

Appellant,

Appellee.

ORDER DENYING MOTION TO DISMISS
APPEAL.

The motion of appellee Kohler, filed April 4, 1938,
to dismiss the appeal herein for failure of appellant
to file the transcript of record and docket the cause
in this court having been heard on April 11, 1938,
and order entered April 12, 1938 permitting the ap-
pellant until May 12, 1938, to file the certified tran-

150 Daisy S. Kohler vs.

script of record in the cause and continuing said
motion to dismiss, and it appearing that the said
transcript of record was filed on May 12, 1938, Now,
Therefore,

It is ordered that the said motion of appellee to
dismiss the appeal herein be, and hereby is denied.

No..

(Hxxtmt (Hanvt of Ajip^alfi

for tlf? Ntntli Oltrrutt

DAISY S. KOHLER,

Appellant,

vs,

YEOMAN MUTUAL LIFE INSURANCE COMPANY
and CLARA KOHLER,

Appellees.

Prttttnn f0r il^If^artttg

T. H.MacDONALD,

of Helena, Montana,

Attorney for Appellant and Petitioner.
Filed , 1939.

Clerk.

FILtlJ

No.

United BUitB

Ctrrmt OInurt of Appeals

fur t\^t Ntntli (Etrrutt

DAISY S. KOHLER,

Appellant,

vs.

YEOMAN MUTUAL LIFE INSURANCE COMPANY
and CLARA KOHLER,

Appellees.

Prtttton fnr S^Ijpartitg

The Court is respectfully requested to grant a
rehearing for the following material matters of law
apparently overlooked by the court:

The Court held (Printed Opinion, page 4): "The
change of beneficiary from Appellee was in conform-
ity with insurers by-laws and was valid and effective
notwithstanding the contract of February 20th, 1929,

— 2—

between decedent and appellant wherein decedent agreed
that appellant should remain his beneficiary."

Insurer waived all of its by-laws by interpleading
the contesting claimants and they cannot be taken
advantage of by any one but insurer.

See appellant's brief, pages 9 and 10 and Iowa
authorities therein cited to-wit: Thomas vs. Loco-
motive Engineers, 191 Iowa 1163, 133 NW. 628, 15
L. R. A. on page 125 and citing Holden vs. Modern
Brotherhood, 151 Iowa 673, 132 NW. 329.

(We cite only Iowa cases, but find this rule uni-
versally followed.)

II.

This Court held (Opinion, page 4): "Insurer being
a Fraternal Beneficiary Association incorporated in
Iowa, the rights of its members and beneficiaries must
be determined by the laws of that state."

Iowa Statute Sec. 8788, provides:

*'No beneficiary shall have or obtain any vested
interest in said benefit until the same shall be-
come due and payable upon the death of said
member."

Insofar as it purported to give appellant a vested
interest in the death benefit here involved the contract
of February 20, 1929, was illegal and void."

The Court apparently overlooked the decisions of

the Supreme Court of Iowa on this section. In three
decisions, all recent, the Supreme Court of Iowa ap-
proved the decisions set forth on appellant's brief,
pages 7, 8 and 9.

See Beed vs. Beed, 207 Iowa 934, 222 NW. 442.

Jacobson vs. New York Life, 199 Iowa, 770, 202
NW. 578.

And in holding that the rule in the above cases
applies to Fraternal Benefit Societies:

Sovereign Camp W. 0. W., vs. Russell, (March 1932),
214, Iowa 39, 241 NW. 395

We quote:

''In some respects the cases of Beed vs. Beed, 207
Iowa 954, and Jacobsen vs. New York Life Ins. Co.,
are very similar to the instant case. In the Jacobsen
case there was reserved the right to change the bene-
ficiary which right existed in the case at bar. In
that case we endorsed this rule :

" 'The rule in this state is, that while the as-
sured may, in the absence of intervening equities,
change at will the beneficiary named in the insur-
ance policy, equitable rights may be acquired in
a beneficiary certificate of insurance which a court
of equity will recognize and enforce'."

We followed this doctrine in the Beed case, supra,
which seems to be the universal doctrine in this
country.

See Locomotive Engineers Mutual Life and Acci-
dent Assurance Company vs. Waterhouse 257 S. W.
(Texas) 304; Columbian Circle vs. Mudra, 132 N. E.
213; Gaston v. Clabaugh, 186 Pac. (Kans.) 1023; Su-
preme Council of Royal Arcanum v. Alexander, Atl.
(N.J.) 276; Supreme Council of Catholic Benevolent
Legion v. Murphy, 55 Atl. N. J. 497; McKeon v. Ehr-
inger, 95 N. E. 604 (Ind.) ; Savage v. Modern Wood-
men, 113 Pac. 9 Kans. 802; Great Camp K. O. M. v.
Savage, 98 N. E. (N. Y.) 197; Stronge v. Supreme
Lodge K. of P., 12 L. R. A., N. S. (N.Y.) 1206. Fol-
lowed by an exhaustive note on this subject; Savage
vs. Modern Woodmen of America, 33 L. R. A., N. S.
(Kans.) 773, followed by a note on the same subject;
Jory V. Supreme Council American Legion of Honor,
26 L. R. A. (Cal.) 733.

Each and all of the cases last cited, together
with our own cases, hold to the general rule that
where an agreement of this kind is made and carried
out by a party other than the assured, such party
acquires, in equity, a vested interest, in the proceeds
of the policy of which, in the absence of countervail-
ing equities, he cannot be deprived. AVhat is here
said is to meet the contention of appellee that the
Iowa cases cited were not Mutual Benefit Society

— 5—

policies, and therefore the loiva rule would not apply-
to the sort of policy we have in this case. All the
cases above cited are cases, where the policy was is-
sued by mutual societies, and therefore no distinc-
tion can he made in this respect as to the kind of
corporation which issued the policy."

The opinion then goes on to deny relief to appellee
on the ground that Iowa has a special statute in the
particular case where the ''agreement not to change
the beneficiary" is based on a consideration of pay-
ing the assessments. "Expressio Unis est Exclusio Al-
terius."

We submit that the law in Iowa is as contended
for by appellant and that these decisions were over-
looked by the court.

III.

We quote from the opinion, page 5:

"Appellant complains of the trial courts find-
ing that, by the contract of September 9, 1930,
appellant agreed to relinquish the certificate and
all her rights thereunder. The evidence tho con-
flicting, supports the finding. We conclude, there-
fore, that assuming its validity, the contract of
February 20, 1929, insofar as it related to the cer-
tificate was abrogated by the contract of Septem-
ber 9th, 1930."

We submit that the court has overlooked that this

— 6—

contract (if it was one) and both contracts involved
were Montana contracts and they at least were gov-
erned by the laws of Montana.

See 12 C. J. Conflict of Laws, Art. 30, ''Place of
Making. ' '

Appellant's brief, page 14, sets out the Montana
Statute 7569 R. C. M. 1921 and 1935:

"A contract in writing may be altered by an
executed oral agreement and not otherwise." (Note
this is a law of contract and not a rule of evidence)
and

"An oral agreement is not executed unless its
terms have been fully performed and performance
on one side is not sufficient.'

Continental Oil vs. Bell, 94 Mont. 123, on page
134-21 Pac. 2nd 65.

Apparently these points were overlooked by the
Court.

It is respectfully petitioned that a rehearing be
granted.

Signed, T. H. MacDONALD,

Attorney for Appellant.

T. H. MacDonald certifies that he is attoniey for
the appellant in this action and that the foregoing
petition in his judgment is well founded and isnot
interposed for delay. -^^-y^^cZft^y^^ ^^^^^'^ /pJo

J^< C,-<<:>— :^

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